YILING PHARMACEUTICAL(SZ:002603) Guotou Securities·2025-10-28 06:02Investment Rating - The report assigns a "Buy-A" investment rating to the company, with an upward adjustment in rating [4]. Core Views - The company has shown a significant recovery in profit, with a 80.33% year-on-year increase in net profit for the first three quarters of 2025, despite a 7.82% decline in revenue [1]. - The company is focusing on innovation and has made substantial progress in both research guidelines and new drug development [3]. - The financial metrics indicate improved profitability, with a net profit margin increase of 8.36 percentage points to 16.99% due to enhanced gross margin and optimized expense ratios [2]. Financial Performance Summary - For the first three quarters of 2025, the company achieved revenue of 5.868 billion yuan, a decrease of 7.82% year-on-year, while net profit reached 1 billion yuan, an increase of 80.33% [1]. - The gross margin for the first three quarters was 60.53%, up 7.14 percentage points year-on-year, and the expense ratio decreased to 39.08%, down 2.78 percentage points [2]. - The company expects revenues of 8.262 billion yuan, 9.116 billion yuan, and 10.004 billion yuan for 2025, 2026, and 2027 respectively, with net profits projected at 1.254 billion yuan, 1.451 billion yuan, and 1.670 billion yuan [7][8]. Innovation and Development Summary - The company has made significant advancements in its traditional Chinese medicine sector, with key products recommended in major clinical guidelines [3]. - New drug approvals and registrations are progressing, with multiple products at various stages of clinical trials and regulatory approval [4][7]. - The company is also increasing its efforts in innovative drug development, with several new drugs in clinical stages and plans for international market registrations [4][7].