HUADONG MEDICINE(SZ:000963) HTSC·2025-04-18 04:34Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 52.27 [7][8]. Core Views - The company's 2024 net profit attributable to shareholders exceeded expectations, driven by a strong recovery in the high-margin industrial sector, with a year-on-year increase of 23.7% to RMB 3.51 billion [1][5]. - The report highlights that the risks associated with industrial procurement are manageable, and the domestic innovative drug sector is entering a period of significant approvals [2][3]. - The company is poised for growth with its self-developed GLP-1 series innovative drugs expected to enter international markets soon [3]. Summary by Sections Financial Performance - In 2024, the company achieved revenue of RMB 41.91 billion, a year-on-year increase of 3.2%, and a net profit of RMB 3.51 billion, up 23.7% year-on-year [1][6]. - The fourth quarter of 2024 saw revenue of RMB 10.43 billion, with a net profit of RMB 0.95 billion, reflecting a significant year-on-year increase of 46.2% [1]. Industrial Sector Insights - The industrial sector's revenue reached RMB 13.81 billion in 2024, growing by 13.1% year-on-year, with a non-deductible net profit increase of 29.0% year-on-year [2]. - The impact of generic drug procurement is expected to be limited, with a minor price reduction of 0.15% for the company's products [2]. Innovative Drug Development - The company has a comprehensive GLP-1 innovative drug portfolio, including HDM1002, which is in phase 3 clinical trials in China and is expected to enter international markets [3]. - Several innovative drugs are anticipated to be approved in 2025, including a PARP inhibitor and an EGFR-TKI for lung cancer [2]. Business Segments - The commercial segment generated revenue of RMB 27.09 billion in 2024, showing a slight year-on-year increase of 0.4% [4]. - The medical aesthetics segment reported revenue of RMB 2.33 billion, down 5.0% year-on-year, with expectations for stabilization in overseas revenue [4]. Profit Forecast and Valuation - The net profit forecasts for 2025-2027 have been adjusted to RMB 4.05 billion, RMB 4.64 billion, and RMB 5.23 billion, respectively, reflecting an upward revision [5][12]. - The company's overall valuation is estimated at RMB 91.69 billion using the SOTP valuation method, with a target price of RMB 52.27 [5][12].