JUMPCAN(SH:600566) ZHONGTAI SECURITIES·2024-02-21 16:00Investment Rating - The report assigns an "Buy" rating for Jichuan Pharmaceutical (600566.SH) [2] Core Insights - Jichuan Pharmaceutical is a leading traditional Chinese medicine company with a stable competitive landscape for its core products and ample cash reserves, boasting a cash balance of approximately 10 billion yuan as of Q3 2023. The company maintains a high dividend payout ratio and is currently undervalued compared to its peers, resulting in a high dividend yield [5][6] - The pediatric product "Xiaoer Chiqiao Qingre Granules" is expected to become a key growth driver, with its market share in pediatric cold medicine reaching over 50%. The pediatric segment's revenue contribution has increased from 17% in 2018 to 27% in 2022, driven by favorable policies and market expansion [5][19] - The company is diversifying its product lineup with second-tier products and business development (BD) collaborations, which are expected to contribute to long-term growth starting from 2025-2026 [5][6] Financial Forecast and Valuation - The company is projected to achieve revenues of 95.59 billion yuan, 102.34 billion yuan, and 112.13 billion yuan for the years 2023-2025, with year-on-year growth rates of 6.25%, 7.06%, and 9.57% respectively. The net profit is expected to reach 25.52 billion yuan, 28.55 billion yuan, and 31.85 billion yuan, with growth rates of 17.55%, 11.90%, and 11.54% [6] - The corresponding P/E ratios for 2023-2025 are estimated at 13, 11, and 10, indicating a favorable valuation compared to peers [6] Product Structure and Market Position - The company has a strong focus on pediatric, respiratory, and digestive markets, with its three core products accounting for 72% of total revenue in 2022. The main products include "Pudilan Anti-inflammatory Oral Liquid," "Rabeprazole Sodium Enteric-coated Capsules," and "Xiaoer Chiqiao Qingre Granules" [10][14] - The pediatric market is rapidly expanding, with sales in public medical institutions reaching 9.6 billion yuan and retail sales at 6.5 billion yuan in 2022. The company’s pediatric products are well-positioned to benefit from this growth [19][22] Business Development and Second-tier Products - The company is actively pursuing BD collaborations and has introduced several new products, including TJ101 and various inhibitors, which are expected to enhance its growth trajectory [5][32] - Second-tier products such as "Jianwei Xiaoshi Oral Liquid" are gaining traction and are expected to contribute significantly to revenue growth [32][35]