Lushang Freda Pharmaceutical (SH:600223) Guoxin Securities·2024-02-27 16:00Investment Rating - The report maintains a "Buy" rating for the company, indicating an expectation that the stock will outperform the market index by more than 20% [20][21]. Core Views - The company is undergoing a strategic transformation following the divestiture of its real estate business, focusing on its core cosmetics and health products. This transition is expected to yield high-quality growth in 2024 as the company completes its organizational adjustments and capitalizes on its cash reserves from the divestiture [15][22][34]. - The management team has been optimized to enhance specialization in core business areas, which is anticipated to support the company's long-term development in a competitive cosmetics market [19][29]. - The company has received significant cash inflows from the sale of its real estate assets, which will bolster its capacity for product development and market expansion in the cosmetics and pharmaceutical sectors [30][51]. Financial Forecast and Valuation - The company is projected to achieve net profits of 287 million, 406 million, and 521 million for the years 2023, 2024, and 2025, respectively, with corresponding P/E ratios of 32, 23, and 18 [34]. - The financial performance for 2023 is expected to reflect a significant increase in net profit, with estimates indicating a growth of 472% to 538% year-on-year [22][42]. - The company’s cosmetics business has shown resilience, achieving growth despite industry pressures, with key brands expected to continue their upward trajectory through product innovation and channel expansion [29][45].