Jinwu Financial News | According to the Sino-Thai International Development Research Report, the 2023 operating revenue of Federal Pharmaceuticals (03933) increased 21.2% year-on-year to 13.74 billion yuan (RMB, same below), slightly exceeding the forecast. The company's gross margin increased from 43.8% to 46.1% due to rising prices of intermediates and API products. The company's sales expense ratio decreased from 14.7% in 2022 to 11.6%, resulting in a year-on-year increase of 70.9% to about 2.7 billion yuan in net profit, exceeding expectations by 18.8%.
Considering that 2023 revenue slightly exceeded expectations, the bank slightly raised the 2024-25E revenue forecast by 0.05% and 2.5%, respectively, and the 2023-26E revenue CAGR is expected to be 6.9%. The bank raised the 2024-25E shareholders' net profit by 21.2% and 23.0%, respectively, taking into account the decline in the company's sales expenses ratio in 2023. The bank is still priced according to the price-earnings ratio of 7.0 times 2024EPER. The target price was raised to HK$11.58, and the rating was raised to “buy”.