ZHONGSHENGYAOYE(SZ:002317) KAIYUAN SECURITIES·2025-06-22 15:23Investment Rating - The investment rating for the company is "Buy" (首次) [1] Core Views - The company, Zhongsheng Pharmaceutical, has a solid foundation in traditional Chinese medicine and is innovating to drive future growth. The company has established a development strategy focusing on traditional Chinese medicine as the base, innovation as the lead, and specialty as the focus. The product pipeline is rich and diverse, covering major therapeutic areas such as cardiovascular, respiratory, ophthalmology, and digestion [4][14] - The company is expected to see steady growth in its traditional Chinese medicine segment and significant potential from its innovative drug pipeline. The projected net profits for 2025-2027 are estimated at 308 million, 345 million, and 392 million yuan, respectively, with corresponding EPS of 0.36, 0.41, and 0.46 yuan [4][6] Summary by Sections Company Overview - Zhongsheng Pharmaceutical was established in 1979 and officially restructured in 2001, becoming a top 100 pharmaceutical company in China. It focuses on drug research, production, and sales, with key products including the Compound Xue Shuan Tong series, Nao Shuan Tong capsules, and Zhongsheng pills [4][14] Business Structure and Strategy - The company has formed a sustainable business structure with innovative drugs as the leading development driver, traditional Chinese medicine as the business foundation, and chemical generic drugs as beneficial support. The core products are expected to maintain steady growth despite short-term challenges from price reductions due to centralized procurement [5][30] Financial Performance and Forecast - The company's revenue for 2023 was 2,611 million yuan, with a projected increase to 2,802 million yuan in 2025, reflecting a year-on-year growth of 13.5%. The net profit is expected to recover from a loss in 2024 to 308 million yuan in 2025, with a net profit margin of 11% [7][30] - The gross margin for 2024 is projected at 56.1%, with a net margin of 11.0%. The company has effectively controlled its expense ratios, which are expected to further decline as the innovative pipeline matures [7][30] Product Pipeline and Innovation - The innovative drug pipeline focuses on major indications, including COVID-19, influenza, weight loss, and MASH. Key products include the globally first peptide-based 3CL inhibitor for COVID-19, which was conditionally approved in March 2023, and an influenza treatment approved in May 2025 [6][14] - The company has a rich product pipeline that covers various diseases and promotes departmental collaboration, enhancing its competitive edge in the market [32][35] Market Position and Competitive Advantage - The company has established a strong market position with its core products, particularly the Compound Xue Shuan Tong series, which has seen a significant increase in market share due to its clinical evidence and academic promotion efforts [36][38] - The sales of the Compound Xue Shuan Tong capsules are expected to stabilize and grow, benefiting from demographic trends and the increasing demand for chronic disease treatments [36][39]