YILING PHARMACEUTICAL(SZ:002603) EBSCN·2024-04-29 02:33Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company experienced significant pressure on its performance in 2023 and Q1 2024, with revenues and profits declining sharply. However, there is an expectation for gradual improvement in Q2 2024 [2] - The company is focusing on innovative research and development in traditional Chinese medicine, particularly in cardiovascular and respiratory health products, which positions it to benefit from policy incentives in the sector [2][4] Summary by Sections Financial Performance - In 2023, the company reported revenues of 10.318 billion yuan, a decrease of 18% year-on-year, with net profit down 43% to 1.352 billion yuan. The cash flow from operations fell by 96% to 155 million yuan [2] - For Q1 2024, revenues were 2.523 billion yuan, down 36% year-on-year, with net profit declining 75% to 304 million yuan [2] - The company proposed a cash dividend of 3.0 yuan per 10 shares, resulting in a payout ratio of 37% [2] Product Performance - Revenue breakdown for 2023 shows cardiovascular products at 4.709 billion yuan (+13%), respiratory products at 3.305 billion yuan (-52%), and other proprietary products at 435 million yuan (+14%) [2] - The respiratory product segment faced significant challenges, while cardiovascular and other proprietary products showed stable growth [2] Research and Development - The company invested 935 million yuan in R&D in 2023, accounting for 9.06% of revenue, an increase of 1.91 percentage points year-on-year [2] - Key R&D achievements include the approval of Tongluomingmu capsules for diabetic retinopathy and the completion of phase III clinical trials for several other products [2] Profit Forecast and Valuation - The profit forecasts for 2024 and 2025 have been revised down to 1.500 billion yuan and 1.931 billion yuan, respectively, reflecting a 49% and 45% reduction from previous estimates. A new forecast for 2026 is set at 2.380 billion yuan [2] - The current price corresponds to a P/E ratio of 22, 17, and 14 for 2024, 2025, and 2026, respectively [2]