Kanion Pharmaceutical(600557)2024-10-31 15:38Investment Rating - The report maintains a "Recommended" rating for Kangyuan Pharmaceutical (600557) with a target price of 19.4 CNY, compared to the current price of 14.31 CNY [1]. Core Views - The company reported a revenue of 3.11 billion CNY for the first three quarters of 2024, a decrease of 11% year-on-year, while the net profit attributable to shareholders was 360 million CNY, an increase of 2% year-on-year. The third quarter revenue was 850 million CNY, down 10% year-on-year, but the net profit increased by 24% year-on-year to 90 million CNY, attributed to an increase in gross margin [1][2]. - The company is expected to benefit from marketing reforms, which may lead to a new development cycle. The financial indicators remain relatively stable, with a gross margin of 73.3% in Q3 2024, up 3.0 percentage points year-on-year [2][3]. Summary by Sections Financial Performance - For the first three quarters of 2024, the total revenue was 3.11 billion CNY, with a year-on-year decline of 11%. The net profit attributable to shareholders was 360 million CNY, reflecting a 2% increase year-on-year. The third quarter saw a revenue of 850 million CNY, down 10% year-on-year, while the net profit rose by 24% year-on-year to 90 million CNY [1][2]. - The company’s gross margin improved to 73.3% in Q3 2024, driven by a favorable change in revenue structure [2]. Product Performance - Injection products, particularly "Retoxin," are expected to experience fluctuations due to high base effects, while "Ginkgo Biloba" sales are under pressure from policy changes. The revenue from injection products for the first three quarters of 2024 was 1.12 billion CNY, down 30% year-on-year [2]. - Oral products, especially "Jin Zhen" and "Xing Bei," are expected to recover from a low base, with "Jin Zhen" projected to generate 600-700 million CNY in revenue, reflecting a growth of 30-40% year-on-year [2]. Future Outlook - The company aims to enhance its sales system through reforms, which are expected to yield positive results. The forecast for net profit attributable to shareholders for 2024-2026 is 500 million CNY, 560 million CNY, and 640 million CNY, with year-on-year growth rates of -6%, +12%, and +13% respectively [2][3].