\u3000\u3000 Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) (600771)
Main points:
Fine Chinese medicine, falling leaves and returning to roots
Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) was founded in the 20th year of Jiajing of the Ming Dynasty (AD 1541), with a history of nearly 500 years. The company has four core varieties of Guilingji, dingkundan, Angong Niuhuang Pill, Niuhuang Qingxin pill and other approval numbers of more than 100 kinds of traditional Chinese medicine. After several twists and turns, the equity was officially returned to Shanxi in 2021, and the controlling shareholder of the company was changed from the original Dongsheng Group to Jinchuang investment (holding 14.53%, controlled by Shanxi SASAC). The company has always adhered to the route of high-quality traditional Chinese medicine, the comprehensive gross profit margin is relatively high, and the proportion of high-quality traditional Chinese medicine continues to increase. In 2020, high-quality traditional Chinese medicine has accounted for more than 20% of the overall revenue.
Return to state-owned holding in Shanxi and look forward to further improvement of the governance structure
On September 3, 2021, Jinchuang investment signed an entrustment agreement with Hainan Shennong Technology Co.Ltd(300189) group, and the voting rights of Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) equity held by Jinchuang investment were entrusted to Hainan Shennong Technology Co.Ltd(300189) group, which means that Hainan Shennong Technology Co.Ltd(300189) group took over. In terms of personnel, the former chairman Zhang Bin applied to resign as chairman of the company, but he still served as director and President of the company. Ju Zhen was elected chairman of the seventh board of directors of the company. Ju Zhen, Li Xiaojun and Liu Zhaowei were elected as directors of the seventh board of directors. All three are from Shanxi state-owned assets, which means that Shanxi state-owned assets take over the Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) board of directors.
The Hainan Shennong Technology Co.Ltd(300189) group is the flagship force of agriculture in Shanxi Province. It is a large-scale agricultural science and technology enterprise established by integrating the agricultural science and technology resources of Shanxi Province. It can be expected that Hainan Shennong Technology Co.Ltd(300189) will provide solid support and broad space for the long-term, healthy and sustainable development of Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) in the future.
The core varieties have strong product power, and the dual driving force of academic + marketing construction
The company's core product groups are Guilingji, dingkundan, Angong Niuhuang Pill and health wine, all of which have strong product power and market space. Dingkundan, as a sacred medicine in the palace, takes the lead and is the top 1 Chinese patent medicine gynecological medicine in China's urban retail pharmacies in 2020. Guilingji has 500 historical secret formulas, and Guilingji has been seeking new breakthroughs in other treatment fields and gradually expanding the treatment population of the product. Angong Niuhuang Pill was rated as "national intangible cultural heritage" because of its excellent material selection and processing. Health wine focuses on the three lines of "medicine Canal + catering + e-commerce", takes a clear strategic stance and becomes a new force of health wine.
The company always adheres to the Beijing Dynamic Power Co.Ltd(600405) spring with academic guidance and scientific research innovation as its sustainable development. On the one hand, it focuses on the evidence-based medical research of Dingkun pill, Guilingji and Angong Niuhuang Pill, on the other hand, it explores the chemical composition of traditional Chinese medicine preparations through the relevant basis of classic famous prescriptions. As of June 2021, there are 26 projects under research, and more than 200 related papers have been published, with fruitful results.
In terms of marketing, focus on terminal hospitals, carry out offline communication activities, and improve the market image of Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) products and brands. On the other hand, cooperate with chain leaders and small and medium-sized pharmacies to improve the coverage and output rate of the company's retail terminals. After a long time of channel construction, I believe that the future volume can be expected.
Investment advice
We expect that the company's revenue from 2021 to 2023 will be RMB 890 million / 12.6 million / 1.64 billion respectively, with a year-on-year increase of - 19.7% / 41.5% / 29.7% respectively, and the net profit attributable to the parent company will be RMB -0.3/0.4/170 million respectively, with a year-on-year increase of - 204.2% / 233.4% / 286.9% respectively, corresponding to EPS from 2021 to 2023 of -0.07/0.09/0.35 yuan. For the first time, the "overweight" investment rating shall be given.
Risk tips
Industry policies and market competition aggravate risks; Raw material supply and price fluctuation risk; Governance improvement is less than expected risk.
