Core Viewpoint - The development of under-forest medicinal herb planting in Donglan County, Guangxi, is positioned as a key driver for rural revitalization, leveraging unique ecological advantages and rich medicinal resources to create economic opportunities while promoting ecological protection [1][5][11]. Summary by Sections Industry Overview - The under-forest economy has been highlighted as a significant opportunity for farmers' income growth, with the national planting area expected to reach 38.5 million acres and annual output value surpassing 104.8 billion yuan by 2024 [1][6]. - Donglan County, despite its ecological fragility, boasts a forest area of 2.8978 million acres and a forest coverage rate of 75.78%, making it a notable area for medicinal herb cultivation [1][2]. Current Developments - Donglan County has established itself as a key area for the cultivation of various medicinal herbs, with 768 species identified, including core varieties like Yao Huang Lian and Tie Pi Shi Duo [2][3]. - The county has implemented a "company + cooperative + base + farmer" model to enhance the scale and standardization of under-forest medicinal herb planting, resulting in over 180,000 acres of medicinal herb cultivation [3][4]. Economic Impact - The under-forest medicinal herb industry is providing new income channels for farmers, with examples of significant earnings from crops like grass coral and Bai Bu, leading to annual output values exceeding 4,000 yuan per acre [5][6]. - The local government has invested over 5 million yuan annually in the development of the under-forest economy, aiming to stimulate further investment and support for the industry [9][11]. Challenges and Opportunities - Despite the growth, challenges such as immature planting techniques, market information lag, and limited sales channels hinder further development [10][11]. - The county plans to enhance its medicinal herb industry by establishing a trading platform, promoting good agricultural practices, and developing a regional brand to improve market presence and pricing power [11]. Future Prospects - Donglan County aims to integrate traditional medicine with tourism and health industries, leveraging its unique resources to create a comprehensive economic model that benefits local communities [7][11]. - The establishment of a medicinal herb industry park with a total investment of 586 million yuan is underway, with a focus on production and processing capabilities to enhance economic returns [6][11].

Investment Rating - The report maintains a "Buy" rating for the company [8] Core Views - The company achieved a revenue of 4.435 billion RMB in 2024, a decrease of 3% year-on-year, while the net profit attributable to shareholders increased by 10% year-on-year to 788 million RMB, indicating that the performance met expectations [1] - The OTC segment showed resilience with a revenue of 3.27 billion RMB in 2024, reflecting a 7% year-on-year growth, driven by strong performance in specific products [2] - The company plans to distribute a cash dividend of 755 million RMB, representing 95.77% of the net profit attributable to shareholders for 2024, highlighting its commitment to shareholder returns [3] - The company has raised its operational targets for 2025, indicating confidence in achieving a compound annual growth rate of at least 12% for net profit from 2025 to 2027 [4] - The target price for the company is set at 28.53 RMB, based on a 20x PE ratio for 2025, reflecting a positive outlook for future earnings growth [5] Summary by Sections Financial Performance - In 2024, the company reported a revenue of 4.435 billion RMB, with a net profit of 788 million RMB, and a non-recurring net profit of 749 million RMB, showing a year-on-year increase of 10% and 6% respectively [1] - The fourth quarter of 2024 saw a revenue of 1.464 billion RMB, marking a 17% year-on-year increase, and a net profit of 154 million RMB, up 30% year-on-year [1] Segment Analysis - The OTC segment's revenue for 2024 was 3.27 billion RMB, growing by 7% year-on-year, with significant contributions from gastrointestinal products and other key items [2] - The health consumer products segment faced a decline of 47% year-on-year, attributed to increased competition and restructuring efforts, but is expected to recover significantly in 2025 [2] - The prescription drug segment reported a revenue of 790 million RMB, down 3% year-on-year, but is anticipated to stabilize and grow in the medium to long term [2] Dividend Policy - The company plans to maintain a high dividend payout, with a cash dividend of 755 million RMB for 2024, reflecting a strong commitment to returning value to shareholders [3] Future Outlook - The company has set ambitious targets for 2025-2027, including a minimum return on capital of 15.42% and a compound annual growth rate for net profit of at least 12% [4] - The earnings forecast for 2025-2027 predicts net profits of 897 million RMB, 1.015 billion RMB, and 1.145 billion RMB respectively, indicating a growth trajectory of 14%, 13%, and 13% year-on-year [5]