Group 1 - The company has a layout in the animal health sector with several veterinary raw material drug projects, including sulfonamide new mycin and tartrate tiamulin [1] - The market price of animal health raw materials is significantly affected by economic cycles, leading to considerable fluctuations [1] - The company is actively expanding its market presence [1]

Core Viewpoint - The veterinary raw material drug market in China is expected to grow significantly, with a projected market size of approximately 185.1 billion yuan in 2024 and around 200 billion yuan in 2025, driven by increased demand and favorable economic conditions [1][8]. Industry Characteristics and Classification - Veterinary raw material drugs are pharmacologically active substances used directly in the manufacture of veterinary drug formulations, characterized by specificity, regulatory requirements, and high technical barriers [2][4]. - They can be classified by chemical properties into synthetic raw materials, biotechnological raw materials, and natural extracts, and by usage into antimicrobial drugs, antiparasitic drugs, antipyretic analgesics, and diagnostic/treatment aids [4][5]. Current Development Status - The veterinary drug industry in China has rapidly developed, becoming a significant part of the global veterinary drug market, with a projected market size of approximately 600 billion yuan in 2024 and 635 billion yuan in 2025 [6][8]. Market Size and Growth - The veterinary raw material drug market is expected to see a growth from 185.1 billion yuan in 2024 to 200 billion yuan in 2025, reflecting a recovery in demand and controlled supply [8][10]. Market Segmentation - Antimicrobial drugs dominate the veterinary raw material drug market, holding an 84% market share, while antiparasitic drugs account for about 11% [10]. Industry Chain - The industry chain includes upstream components such as basic chemical raw materials and intermediates, midstream production of raw materials through chemical synthesis and fermentation, and downstream processing into veterinary drug formulations for livestock and pet healthcare [12]. Competitive Landscape - The veterinary raw material drug industry in China has a low concentration level, with major companies including Haisheng Pharmaceutical, Qihui Pharmaceutical, Guobang Pharmaceutical, and Puluo Pharmaceutical, among others [14][16]. - The industry is experiencing a shift towards larger, more capable firms as regulatory standards improve, leading to a potential increase in market concentration [14]. Key Enterprises - Guobang Pharmaceutical reported a revenue of 1.831 billion yuan from animal health raw materials in 2024, with a gross margin of 18.86% [16]. - Haisheng Pharmaceutical achieved a revenue of 112 million yuan from raw materials in 2024, with a gross margin of 36.28% [18]. Technology Development Trends - The production of raw materials and intermediates requires significant investment in research and development to improve process technology and compete in higher-margin sectors [20].

Investment Rating - The report maintains a "Buy" rating for Guobang Pharmaceutical (605507) with a target price of 25.00, compared to the last closing price of 19.15 [1]. Core Views - The company's stock repurchase plan, amounting to between 100 million and 200 million RMB, is seen as a demonstration of confidence and aims to enhance investor trust and improve employee motivation through stock ownership plans [4][5]. - The veterinary medicine sector is expected to enter a price increase cycle, with demand for veterinary raw materials likely to rise due to the recovery of the pig farming industry, which began to turn profitable in Q2 2024 [5]. - The company has significantly expanded its fixed assets from 1.178 billion RMB in 2019 to 3.693 billion RMB in 2023, indicating a more than threefold increase in capacity [6]. Financial Projections - Revenue projections for the company are as follows: 2024 at 6.001 billion RMB, 2025 at 6.817 billion RMB, and 2026 at 7.828 billion RMB, with corresponding net profits of 801 million RMB, 1.004 billion RMB, and 1.204 billion RMB respectively [7]. - The report forecasts a revenue growth rate of 12.19% for 2024, 13.59% for 2025, and 14.83% for 2026, with net profit growth rates of 30.76%, 25.37%, and 19.90% for the same years [11]. Market Position - The company holds a high market share in its main products and has a complete industrial chain, with expectations to achieve 30 globally leading products, 80 products in regular production, and the capability to produce 120 products [7].