Investment Rating - The report gives a "Buy" rating for Tai Long Pharmaceutical [4] Core Views - Tai Long Pharmaceutical is a leading pharmaceutical company in Henan Province, with steady growth in performance driven by its major shareholder's continuous support and the development of multiple business segments [1][20] - The company's core business segments include pharmaceutical formulations, traditional Chinese medicine (TCM) pieces, and pharmaceutical research and development services, which are expected to contribute to future growth [1][20][22] Summary by Sections Company Overview - Established in 1993 and listed in 1999, Tai Long Pharmaceutical is the first listed company in Henan's pharmaceutical industry. The company has expanded its business through acquisitions, including Tong Jun Tang and Beijing Xin Ling, to enter the TCM and pharmaceutical R&D outsourcing sectors [1][14][16] Business Segments - The main product in the TCM oral liquid segment is Shuanghuanglian Oral Liquid, which is expected to maintain steady growth due to successful procurement and market expansion efforts [2][42] - The TCM pieces business, primarily operated by Tong Jun Tang, is projected to benefit from national procurement initiatives, leading to rapid growth [43][50] - The pharmaceutical R&D outsourcing sector, led by Beijing Xin Ling, is anticipated to recover as the industry stabilizes, with expected revenue growth in the coming years [3][64] Financial Forecast - Revenue projections for 2025-2027 are estimated at CNY 2.13 billion, CNY 2.32 billion, and CNY 2.53 billion, respectively, with net profits of CNY 66 million, CNY 98 million, and CNY 117 million [4][72] - The earnings per share (EPS) are forecasted to be CNY 0.11, CNY 0.17, and CNY 0.20 for the same period, with corresponding price-to-earnings (P/E) ratios of 45x, 30x, and 25x [4][72] Market Position - The company has a strong market position in the pediatric medication segment, with a product cluster that includes various oral liquids for children, enhancing its competitive edge [2][42] - The TCM oral liquid market is projected to grow, supported by increasing demand for respiratory system treatments, with the market size reaching CNY 75.88 billion in 2023 [36][39] Research and Development - R&D investment has increased significantly, from CNY 56.92 million in 2021 to CNY 108.78 million in 2024, indicating a commitment to innovation and product development [51][53] - The company has a robust pipeline of products under development, including traditional Chinese medicine formulations and high-end generic drugs, which are expected to drive long-term growth [53][55]