ZZPZH(SH:600436) Huajing Securities·2024-04-26 03:02Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 282.55, down from RMB 324.49, reflecting a 13% decrease in the target price [1][13]. Core Insights - The company is expected to experience a revenue and net profit CAGR of 13% and 22% respectively from 2023 to 2026, driven by price increases in liver disease medications and a significant boost in dividend payout [4][5]. - The first quarter of 2024 showed strong recovery with revenue and net profit growing by 21% and 27% year-on-year, primarily supported by the liver disease medication segment and cosmetics business [5][6]. - The report highlights that the liver disease medication segment achieved revenue of RMB 15.1 billion in Q1 2024, marking a 28% increase year-on-year, attributed to a price increase implemented in May 2023 [5][10]. Financial Summary - The company reported a revenue of RMB 10,058 million for 2023, with a projected revenue of RMB 11,619 million for 2024, reflecting a 1% downward adjustment from previous estimates [11][12]. - The projected EPS for 2024 is RMB 5.70, down from RMB 6.57, indicating a 13% reduction in earnings expectations [1][11]. - The report indicates that the company's gross profit margin is expected to face pressure due to rising raw material costs, leading to a 7% and 8% downward adjustment in gross profit forecasts for 2024 and 2025 respectively [11][12]. Valuation - The report employs a two-stage DCF valuation method, maintaining a perpetual growth rate of 6.0% and a WACC of 7.3% [13][15]. - The target price of RMB 282.55 implies a 24% upside potential from the closing price of RMB 227.39 as of April 22, 2024, with a projected P/E ratio of 50x for 2024, which is higher than the industry average of 19x [13][15].