Fangsheng Pharmaceutical(SH:603998)2024-05-29 11:00Investment Rating - The report maintains an "Outperform" rating for the company, with a target price of RMB 14.85 based on a 28X PE for 2024 [51][56]. Core Insights - The company reported a revenue of RMB 1.63 billion in 2023, with a net profit attributable to shareholders of RMB 187 million, reflecting a decrease of 34.64% year-on-year. However, recurring net profit attributable to shareholders increased by 25.35% to RMB 133 million [23][74]. - The company has 13 preclinical TCM innovation projects, with significant progress in several key products, including one entering Phase III trials expected to apply for production in 2025 [5][20]. Financial Summary - Revenue and Profit Forecasts: The company is projected to achieve net profits of RMB 233 million, RMB 298 million, and RMB 368 million for 2024, 2025, and 2026 respectively, with corresponding EPS of RMB 0.53, RMB 0.68, and RMB 0.84 [51][56]. - Revenue Breakdown: In 2023, the pharmaceutical manufacturing segment generated revenue of RMB 1.44 billion, with notable growth in respiratory and pediatric medications, while cardiovascular and musculoskeletal medications saw declines due to centralized procurement policies [52][74]. - Financial Ratios: The gross margin is expected to improve gradually from 68.1% in 2023 to 69.6% by 2026, while the return on equity is projected to rise from 12.8% in 2023 to 17.1% in 2026 [2]. Market Position - The company is focusing on innovative TCM and has a rich product matrix, which is expected to enhance its market position and drive future growth [51][56].