Beijing Tongrentang Co.Ltd(600085) (600085)
The bottleneck of production capacity has been basically solved, and the performance has ushered in recovery
Beijing Tongrentang Co.Ltd(600085) as a time-honored traditional Chinese medicine enterprise, it has a profound brand culture and an effective coordination in the organizational structure, and has a long reputation in the industry. From 2019 to 2020, affected by capacity transfer and epidemic situation, the performance hit the bottom; The company is dormant and ready to actively deal with adverse factors. In 2020, the company launched marketing reform, created a “4 + 2” (four business divisions and two special teams) business model, integrated existing resources, clarified the functions of each business division, clarified strategies, made accurate efforts, basically solved the bottleneck of production capacity, and recovered steady growth of performance. In the first three quarters of 2021, the company realized an operating revenue of 10.683 billion yuan, a year-on-year increase of 18.00%; The net profit attributable to the parent company was 920 million yuan, a year-on-year increase of 28.67%. On December 31, 2021, the new chairman of the company was appointed and replaced by the original senior executives of the company, which is conducive to the sustainability and stability of the company’s operation and promote the further development of the business.
Focusing on the core varieties, Angong Niuhuang Pill still has room for price increase
Adhering to the guiding ideology of “taking variety transportation as the core and terminal work as the direction”, the company closely focuses on the large variety strategy. In the first half of 2021, the top five varieties sold by the company achieved a revenue of 2.237 billion yuan, a year-on-year increase of 22.84%. The company’s core product Beijing Tongrentang Co.Ltd(600085) Angong Niuhuang Pill has a long reputation and high market recognition, and the “dual natural + exclusive production process” forms a barrier to curative effect. In 2021, the company issued a price adjustment notice. The sales price of Angong Niuhuang Pill increased from 780 yuan / pill to 860 yuan / pill, an increase of about 10%, further increasing the profitability of the company. Thanks to the continuous rise in the price of natural traditional Chinese medicine raw materials, Angong Niuhuang Pill still has room for price increase.
We will continue to promote marketing reform and make efforts to drive the commercial sector offline and offline
The subsidiary Beijing Tongrentang Co.Ltd(600085) commercial retail stores take the sales of the company’s own varieties as the main body, build a professional and comprehensive national pharmacy integrating famous stores, famous drugs and famous doctors, and gradually cultivate into an important display window of Beijing Tongrentang Co.Ltd(600085) culture. Compared with chain pharmacies dominated by general medicine, Beijing Tongrentang Co.Ltd(600085) retail pharmacies sell drugs at higher prices, and the income of a single store is much higher than the industry average. The company took the initiative to grasp the favorable situation of market recovery, further explore the new trend of retail development, give full play to the collaborative advantages of Companies in the Department, actively layout online sales platforms, participate in online promotion in key and multiple forms with the help of mature e-commerce platforms, carry out audio and video publicity and promotion, and effectively increase product exposure, In 2020, the parent company’s 37 product specifications achieved online sales of 220 million yuan.
Profit forecast and valuation
As a master of traditional Chinese medicine, the company’s performance has hit the bottom in the past two years due to adverse factors. With the company’s continuous promotion of marketing reform and management improvement, the negative effects have been basically eliminated, and the performance is expected to continue to recover. We predict that the company’s operating revenue from 2021 to 2023 will be 15.171 billion yuan, 17.757 billion yuan and 20.424 billion yuan respectively, and the net profit attributable to the parent company will be 1.235 billion yuan, 1.463 billion yuan and 1.737 billion yuan respectively, With reference to the 70 times PE given by comparable companies in 2021, Beijing Tongrentang Co.Ltd(600085) is reasonably valued at 86.471 billion yuan, corresponding to the target price of 63.05 yuan. It is covered for the first time and given a “buy” rating.
Risk tips: industry policy risk, raw materials and quality standards risk, market risk, abnormal fluctuation risk of recent transactions in the traditional Chinese medicine sector, and the company’s stock price has changed recently
