JZYY(SH:600750) HTSC·2025-04-28 07:12Investment Rating - The report maintains a "Buy" rating for the company [8] Core Views - The company reported Q1 2025 revenue of 1.18 billion RMB, with a net profit attributable to shareholders of 280 million RMB, reflecting a year-over-year change of -7.0% and +5.9% respectively [1] - The OTC sales have faced short-term pressure, but the overall gross margin has improved significantly on a quarter-over-quarter basis [1] - The company is positioned as a leader in the domestic gastrointestinal OTC market and is expected to achieve stable growth through both organic and external means, maintaining a solid foundation for high dividends [1] Summary by Sections OTC and Prescription Drugs - OTC segment revenue for Q1 2025 was 890 million RMB, down 12.1% year-over-year, with a gross margin of 76.1%, up 2.1 percentage points year-over-year. The company anticipates double-digit growth for the full year as consumer spending recovers [2] - Prescription drug revenue for Q1 2025 was 190 million RMB, up 23.7% year-over-year, with a gross margin of 23.7%, up 9.2 percentage points year-over-year. The company expects continued recovery in prescription drug revenue as the negative impact of centralized procurement diminishes [2] Financial Performance - The company's gross margin for Q1 2025 was 68.2%, an increase of 13.1 percentage points quarter-over-quarter, primarily due to adjustments in the beverage business structure [3] - The overall expense ratios for sales, management, and R&D were 33.8%, 4.5%, and 2.3% respectively, showing a decrease in overall expense ratios [3] - As of Q1 2025, accounts receivable, inventory, and cash were 640 million RMB, 430 million RMB, and 1.62 billion RMB respectively, indicating good inventory and cash turnover conditions [3] Shareholder Returns - The company's equity incentive plan was approved in April 2025, with enhanced unlocking conditions for 2025-2027, reflecting confidence in operational goals [4] - In 2024, cash dividends accounted for 95.77% of the net profit attributable to shareholders, demonstrating a strong commitment to shareholder returns [4] Earnings Forecast and Valuation - The report maintains earnings forecasts, projecting net profits attributable to shareholders of 897 million RMB, 1.015 billion RMB, and 1.145 billion RMB for 2025, 2026, and 2027 respectively, reflecting year-over-year growth of 14%, 13%, and 13% [5] - The target price is set at 29.96 RMB, based on a 21x PE ratio for 2025, with a reference to comparable companies [5]