CONBA(SH:600572)2024-06-04 11:00Investment Rating - The report gives an "Outperform" rating for the company, with a target price of 7.27 RMB based on a 25X PE for 2024 [42]. Core Viewpoints - The company has successfully reversed its previous difficulties and is now entering a stable growth phase, achieving a revenue of 6.733 billion RMB in 2023, a year-on-year increase of 12.20% [63]. - The company focuses on the traditional Chinese medicine (TCM) health sector, emphasizing resource integration and continuous optimization of its business structure [63]. - The company aims to enhance its brand strategy and product matrix, with plans to increase the sales scale of its key products [41]. Summary by Sections 1. Business Strategy and Performance - The company has gradually divested non-core businesses and is concentrating on the TCM health sector, which has led to improved operational efficiency and profitability [60][63]. - The company reported a net profit of 554 million RMB in 2023, reflecting a 14.60% year-on-year growth, indicating a recovery to historical performance levels [63][24]. 2. Product and Brand Development - The company has established a "one body, two wings" product strategy, focusing on a full range of TCM products while also developing specialty chemical drugs and health consumer products [14][41]. - In 2023, the company achieved sales of over 1 billion RMB for 17 product series, contributing to 68.6% of total revenue [41][14]. 3. Research and Development - The company has increased its R&D investment, with a R&D expense ratio of 4.43% in 2023, up nearly 1 percentage point from 2021 [5][7]. - The company is actively pursuing innovative drug development, with 200 ongoing projects, including 57 new projects initiated in 2023 [7][8]. 4. Financial Performance - The company’s revenue from TCM health products reached 4.544 billion RMB in 2023, a 16.13% increase from the previous year, accounting for 67.49% of total revenue [26][28]. - The company’s gross profit margin has stabilized, with a non-GAAP net profit margin of 8.32% in 2023, reflecting improved profitability [30][32]. 5. Market Position and Competitive Advantage - The company has strengthened its market position in the non-prescription drug sector, ranking among the top 10 non-prescription drug manufacturers in China [35][41]. - The company is leveraging digital marketing and e-commerce partnerships to expand its market reach and enhance brand visibility [33][41].