\u3000\u30 Shenzhen Fountain Corporation(000005) 38 Yunnan Baiyao Group Co.Ltd(000538) )
Century old famous medicine, century old brand, achieving brand value
Yunnan Baiyao Group Co.Ltd(000538) as the highest level of national confidentiality, it has a long history of one hundred years. The company is not limited to the original traditional medicinal efficacy of Baiyao, but continues to push through the old and bring forth the new, extend and expand to the field of great health, and gradually develop large-scale health products with a sales scale of more than 5 billion yuan. It continues to rank first in the industry in a number of brand rankings, and is a well deserved leader in the field of great health in China. In terms of fundamentals, over the past decade, the company's revenue and net profit attributable to the parent company have maintained high-quality and stable growth. The revenue side increased from 10.075 billion yuan in 2010 to 32.743 billion yuan in 2020, realizing cagr13%; The net profit attributable to the parent company increased from 925 million yuan in 2010 to 5.516 billion yuan in 2020, achieving a compound annual growth rate of 20%.
The four business units have their own characteristics and go hand in hand
1) Pharmaceutical Division: including traditional Yunnan Baiyao Group Co.Ltd(000538) drugs, transdermal patches and other generic drugs. Baiyao patch and aerosol are aimed at the track of orthopedics and traumatology University. The band aid brand has the highest score for three consecutive years, and the generic medicine sector has a relatively complete product system. In 2019, the revenue of the pharmaceutical division was 4.4 billion yuan, and the gross profit margin (dominated by the parent company) steadily increased to 55.6% of Q1 in 2021.
2) Health Products Division: long term high-quality growth and become the core driving force of the company's growth. In 2020, the revenue reached 5.39 billion yuan, a year-on-year increase of 15.1%, accounting for 16.5% of the company's total revenue. Among them, the market share of toothpaste continues to rank first. In 2020, the Chinese market share of Yunnan Baiyao Group Co.Ltd(000538) toothpaste was 22.20%, with strong brand influence. It is not limited to toothpaste, but Yunnan Baiyao Group Co.Ltd(000538) takes toothpaste as a successful model, expands to toiletries, sanitary products and beauty products, and opens the road of the whole industry of great health.
3) traditional Chinese medicine resources: affected by the decline in the price of Panax notoginseng, the revenue growth of the sector stagnated in 2019. However, the company has always focused on Leopard 737, built an industrial chain system, created a high-standard and high-quality good Panax notoginseng, and further strengthened the position of leopard 737 brand in the medium and high-end market of Panax notoginseng. In terms of channels, the new retail model dominated by "Baiyao life + experience store" has been promoted in an orderly manner. The "Baiyao life + experience store" has continued to gain good reputation. By 2020, 18 stores have been opened, and the scale of opening has increased steadily year by year.
4) provincial pharmaceutical company: in 2020, the revenue of Yunnan pharmaceutical company was 21.5 billion yuan. As the leader in Yunnan Province, the company's market share continued to increase. In addition, Baiyao will increase its participation in the national leading pharmaceutical commercial company Shanghai Pharmaceuticals Holding Co.Ltd(601607) . As a strategic investor, Baiyao plans to subscribe for a total amount of RMB 11.229 billion and hold Shanghai Pharmaceuticals Holding Co.Ltd(601607) 18.02% shares. We look forward to the strong combination of the two.
Reform to stimulate new vitality of Baiyao
Completion of mixed reform: in 2019, the four-year mixed reform will be successfully implemented. Introduce private capital and make progress through negotiation without actual controller; The management team goes to administration and returns to the logic of marketization; Enhance Baiyao's financial strength, the company has become a platform for the acquisition and resource integration of the pharmaceutical industry, and started strategic planning and international layout.
New industrial layout: taking advantage of the institutional vitality and capital resource advantages brought by the mixed ownership reform and the absorption and consolidation of the overall listing, the company has made the next strategic adjustment and industrial layout with the idea of market-oriented operation. Capital operation is also frequent. It has made efforts in hot fields such as industrial marijuana, antibody, investment and medical beauty, highlighting the strategic direction of its own big health management. Introducing new management talents: in March 2021, Dong Ming, former vice president of Huawei, was appointed as Yunnan Baiyao Group Co.Ltd(000538) CEO; In January 2022, Zhang Ning, Professor of Peking University, was appointed as the chief scientist with a doctor of Biochemistry, cell and molecular biology from Johns Hopkins University School of medicine. Create a comprehensive talent layout of science and technology + R & D to lay a foundation for future development.
Investment advice
We expect that the company's revenue from 2021 to 2023 will be RMB 38.39 billion / 44.17 billion / 50.54 billion respectively, with a year-on-year increase of 17.3% / 15.0% / 14.4% respectively, and the net profit attributable to the parent company will be RMB 38.0/51.8/6.02 billion respectively, with a year-on-year increase of - 31.2% / 36.4% / 16.3% respectively, corresponding to EPS of RMB 2.96/4.04/4.70 from 2021 to 2023, with a corresponding valuation of 31x / 23x / 19x. For the first time, the "overweight" investment rating shall be given.
Risk tips
The fluctuation of product price is lower than expected, the investment income is lower than expected, and the performance of toothpaste and big health products is lower than expected
