DRTG(SH:600329) Jianghai Securities·2024-05-11 03:31Investment Rating - The investment rating for the company is "Buy" (first coverage) with a current price of 35.29 CNY and a target price of 41.85 CNY over a 12-month period [1]. Core Insights - The company has a rich historical background, founded in 1914, and has developed into a leading enterprise in traditional Chinese medicine with a strong brand presence [12]. - The implementation of the "Three Core and Nine Wings" strategy has driven steady business growth, particularly through the core product, "Suxiao Jiuxin Wan," which achieved sales exceeding 2 billion CNY in 2023, reflecting a year-on-year growth of 14.16% [1][27]. - The company has a robust product reserve with 599 approved drug varieties, including exclusive and protected traditional Chinese medicine products, which supports long-term growth [28]. Summary by Sections 1. Historical Background and Brand Strength - The company has a deep historical foundation and has won 14 intangible cultural heritage projects, showcasing its leadership in traditional medicine [12]. - The introduction of mixed ownership reform has revitalized the company, enhancing its operational capabilities and market competitiveness [13]. 2. Business Performance and Growth Strategy - The company reported a revenue of 82.22 billion CNY in 2023, maintaining stability compared to 2022, with a net profit of 9.87 billion CNY, reflecting a year-on-year increase of 14.53% [19]. - The proportion of traditional Chinese medicine revenue has steadily increased, reaching 70.98% of total revenue in 2023, with a gross margin of 57.27% [20]. 3. Product Development and Market Expansion - The company has invested significantly in R&D, with expenses rising from 0.87 billion CNY in 2012 to 1.85 billion CNY in 2023, focusing on key products and new market opportunities [24][25]. - The "Three Core and Nine Wings" strategy emphasizes the core product "Suxiao Jiuxin Wan" and secondary products, which are expected to drive future growth [27]. 4. Financial Forecast and Valuation - Revenue projections for 2024, 2025, and 2026 are estimated at 89.59 billion CNY, 97.27 billion CNY, and 104.09 billion CNY, respectively, with corresponding net profits of 11.94 billion CNY, 14.31 billion CNY, and 16.96 billion CNY [4][5].