CHINARES PHARMA(03320)2024-03-26 16:00Investment Rating - The report maintains an "OUTPERFORM" rating for China Resources Pharmaceutical [3][10][11] Core Views - The company achieved a revenue of RMB 244.7 billion in FY2023, representing a growth of 12.2%. The revenue breakdown shows that the pharmaceutical distribution, pharmaceutical retail, and pharmaceutical businesses accounted for 80%, 3.9%, and 16% of total revenue, respectively [11] - The gross profit margin improved to 15.7%, benefiting from enhancements in the pharmaceutical business. The net profit reached RMB 7.775 billion, a year-on-year increase of 16.8% [11] - The company is actively expanding its business through mergers and acquisitions while integrating internal resources for synergy, which is expected to support sustainable growth [4][11] Financial Summary - Revenue for FY2023: RMB 244.7 billion (+12.2%) - Net profit: RMB 7.775 billion (+16.8%) - Gross profit margin: 15.7% (+0.3 percentage points) - R&D expenditure: Approximately RMB 25.04 billion (+12.6%) [11][12] Business Performance - Pharmaceutical business revenue: RMB 43.5 billion (+14.3%), with all categories showing growth. Traditional Chinese medicine, chemical medicine, biological medicine, and nutritional supplements generated revenues of RMB 21.6 billion, RMB 17 billion, RMB 2.1 billion, and RMB 2.7 billion, respectively [11] - Pharmaceutical distribution revenue: RMB 202.2 billion (+11.4%), with import business contributing approximately RMB 14.1 billion [11] - Pharmaceutical retail revenue: RMB 9.6 billion (+26.2%), driven by the active undertaking of prescription outflow [11] Forecasts - Expected revenues for 2024-2026: RMB 271 billion, RMB 299.3 billion, and RMB 329.8 billion, with growth rates of 10.8%, 10.4%, and 10.2% respectively [5][11] - Expected net attributable profits for 2024-2026: RMB 4.287 billion, RMB 4.749 billion, and RMB 5.241 billion, with growth rates of 11.2%, 10.8%, and 10.4% respectively [5][11] Valuation - The target price is maintained at HKD 8.12, indicating a potential upside of 57% from the current share price of HKD 5.17 [6][11]