江中药业：修订股权激励，上调经营目标

Investment Rating - The report maintains a "Buy" rating for Jiangzhong Pharmaceutical [5][8] Core Views - The revised stock incentive plan reflects the company's confidence, with adjusted performance targets indicating a commitment to enhancing shareholder returns and operational efficiency [2][4] - The OTC business remains a solid growth foundation, while the health and prescription drug segments are expected to drive future growth [3][4] Summary by Sections Investment Rating - The target price is set at RMB 31.38, with the current closing price at RMB 23.19, indicating significant upside potential [9][8] Performance Targets - The revised incentive plan aims to grant up to 6.877 million restricted shares, representing 1.09% of the total share capital, with performance targets including: 1. Capital return rates of no less than 15.42% for 2025-2027, up from 13.6% previously [2] 2. Compound annual growth rates for net profit of at least 12% for 2025-2027, revised from 9% [2] 3. R&D investment intensity of no less than 3.91% for 2025-2027 [2] Business Growth - The OTC market capacity exceeds RMB 200 billion, with the company expected to achieve growth above industry levels through strategic planning [3] - The health division is focusing on a "1+3+N" strategy to enhance product structure and brand development [3] - The prescription drug division is anticipated to stabilize and grow post-2023, focusing on product groups and channel capabilities [3] Financial Projections - The company’s revenue projections for 2024-2026 are RMB 43.6 billion, RMB 48.5 billion, and RMB 53.6 billion respectively, with net profits of RMB 7.7 billion, RMB 9.0 billion, and RMB 10.1 billion [14] - The report anticipates a sales expense ratio of 36.0% for 2024, slightly adjusted from previous estimates [14] Shareholder Returns - Since the acquisition by China Resources in 2019, the company has focused on improving efficiency and increasing shareholder returns, with cash dividends of RMB 760 million planned for 2024 [4]