Yangtze River Business Daily reporter Shen Yourong
"Moutai in Medicine" Pien Tze Huang (600436. SH) marketing-driven strategy is effective.
A few days ago, Pien Tze Huang disclosed its 2023 annual report, and the company's operating income and net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") were 10.058 billion yuan and 2.797 billion yuan respectively, with double-digit growth year-on-year.
In 2022, the year-on-year growth rate of the company's operating income and net profit fell to single digits for the first time since 2015.
Pien Tze Huang's performance growth in 2023 is due to two important factors: first, the company has made the largest price increase in history, and second, the sales expenses have increased significantly. In that year, the company's sales expenses reached 783 million yuan, a year-on-year increase of more than 60%, much higher than the growth rate of operating income.
Correspondingly, Pien Tze Huang's R&D expenses were 232 million yuan, an increase of only 1.01% year-on-year.
In the secondary market, since July 2021, Pien Tze Huang's share price has fallen from a high of 491.88 yuan per share to 227.39 yuan per share on April 22 this year, a decline of more than 50%, and the market value has evaporated by 159.5 billion yuan.
Pien Tze Huang has a rare move this time, that is, the first large-scale dividend. The company plans to pay cash dividends of 1.4 billion yuan, more than 50% of the net profit of the year. Moreover, the company's 2024 interim cash dividend will not exceed 50%.
Pien Tze Huang's such a rare dividend can boost investor confidence?
Sales expenses increased by 300 million yuan, and R&D expenses increased by 2.32 million
The growth of revenue and net profit accelerated, and Pien Tze Huang's operating performance improved.
According to the latest disclosed annual report, in 2023, Pien Tze Huang will achieve operating income of 10.058 billion yuan, a year-on-year increase of 15.69%, which is the first time in the company's history that the revenue has exceeded the 10 billion mark, the net profit will be 2.797 billion yuan, a year-on-year increase of 13.15%, and the net profit after deducting non-recurring gains and losses (hereinafter referred to as "non-net profit") will be 2.854 billion yuan, a year-on-year increase of 15.26%.
In 2022, the company's operating income and net profit will be 8.694 billion yuan and 2.472 billion yuan respectively, with a year-on-year increase of 8.38% and 1.66%, and the growth rate will drop to single digits. Moreover, the company's net profit growth rate that year was only 1.66%, which was the lowest growth rate of its net profit since 2010. From 2016 to 2021, the company's operating income and net profit increased by double digits year-on-year.
What will Pien Tze Huang rely on to reverse the unfavorable business situation in 2023?
According to the annual report, in 2023, the company's sales of liver disease drugs, cardiovascular and cerebrovascular drugs, and other drugs will be 4.5345 million boxes, 1.0449 million boxes, and 10.122 million boxes, respectively, a year-on-year increase of 34.02%, 28.71%, and 12.62%.
In May 2023, Pien Tze Huang carried out the largest price increase in history, raising the retail price in the market from 590 yuan/capsule to 760 yuan/capsule, and the supply price was raised by about 170 yuan/capsule, and the supply price in overseas markets was raised by about US$35/capsule.
Pien Tze Huang's large-scale price increase will reduce patients' desire to buy to a certain extent, so what does it rely on to achieve sales growth?
A reporter from the Yangtze River Business Daily found that in 2023, Pien Tze Huang's sales expenses will be 783 million yuan, an increase of 300 million yuan year-on-year, an increase of 61.95%, a significant increase.
From the perspective of the composition of sales expenses, the fastest growth is in promotion, business promotion and advertising expenses, which will be 531 million yuan in 2023, a year-on-year increase of 108.39%, more than doubled.
Judging from this, Pien Tze Huang promoted the growth of product sales through large-scale marketing, and the price increase of products promoted performance growth.
Of course, compared with its peers, Pien Tze Huang's sales expense ratio is at a relatively low level. In 2023, the company's sales expenses will account for 7.78% of operating income, Baiyunshan's proportion will be 8.08%, and Kangyuan Pharmaceutical, Jianmin Group, etc. will both account for more than 30%.
Compared with the sharp increase in sales expenses, Pien Tze Huang's R&D expenses are almost standing still. In 2023, the company's R&D expenses will be 232 million yuan, an increase of only 2.3198 million yuan, or 1.01%, from the same period of the previous year.
Proposed cash dividend of 1.4 billion
Although Pien Tze Huang's operating performance returned to double-digit growth, the company was not without adjustments.
As of the end of 2023, Pien Tze Huang holds shares in a number of listed companies such as China Resources Shuanghe and Liaoning Chengda. In 2023, the company's fair value change net income will be 0.08 billion yuan, compared with a loss of 0.02 million yuan in 2022. The company's net investment income was 126 million yuan, compared with 33 million yuan in the same period last year.
It is worth mentioning that in the fourth quarter of 2023, the company's operating income was 2.459 billion yuan, a year-on-year increase of 18.30%, but the net profit was 393 million yuan, a year-on-year decrease of 6.47%.
The main reason for the decline in net profit in the fourth quarter of the year was the significant increase in selling expenses, which were 405 million yuan, compared with 144 million yuan, 100 million yuan and 134 million yuan in the first, second and third quarters, respectively.
In the secondary market, in 2021, Pien Tze Huang was once hard to find a drug, so the company was highly sought after, and its stock price rose sharply. On July 21, 2021, the company's share price rose to a peak of 491.88 yuan per share, doubling from March of that year.
However, the company's stock price turned higher and continued to fall. On April 19 this year, Pien Tze Huang's closing price was 226.03 yuan per share, the lowest since December 7, 2020.
On April 22, the company's closing price was 227.39 yuan per share, with a market value of 137.2 billion yuan, an evaporation of 159.5 billion yuan from its peak of 296.7 billion yuan.
Recently, a rare action of Pien Tze Huang has attracted market attention.
On the evening of April 19, Pien Tze Huang disclosed the profit distribution plan for 2023. According to the announcement, audited by an accounting firm, by the end of 2023, the company's distributable profit at the end of the period was about 9.996 billion yuan. According to the resolution of the board of directors, the profit distribution plan intends to distribute a cash dividend of 23.20 yuan (tax included) to all shareholders for every 10 shares based on the total share capital registered on the record date of the implementation of equity distribution, with a total cash dividend of about 1.4 billion yuan (tax included), accounting for 50.04% of the company's net profit in 2023.
The company also said that in the middle of 2024, it will be submitted to the general meeting of shareholders to authorize the company's board of directors to decide on the 2024 interim profit distribution plan and implement it, with a dividend rate of no more than 50%.
The Yangtze River Business Daily reporter found that since its listing in 2003, the company has never paid interim dividends. Although the company insists on implementing annual dividends, the amount of cash dividends is not high, which will be 754 million yuan in 2022. The amount of cash dividends in 2023 is nearly double that of 2022, which is its first large-scale dividend.
Significantly increase the proportion of cash dividends, and will pay cash dividends for the first time in mid-2024, the purpose of Pien Tze Huang is to share the results of business and boost investors' confidence in holding shares.
The market value has evaporated by nearly 160 billion yuan, can Pien Tze Huang use dividends to restore investor confidence?
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