Recommended logic: 1) the first imported pharmaceutical equipment port landed in Chongqing, and the "Chongqing New Europe" railway helped to connect European drug imports and speed up the construction of warehousing and logistics, and the handling flow increased to 30 billion in 2022. 2) driven by "endogenous growth + extension expansion", the southwest region has a solid leading position, and plans to cover 300 prefecture-level cities in China in 2025.
3) the growth rate of medical device performance with high gross margin is faster than expected, and strive to achieve 20 billion of medical device income in 2025.
Relying on the three major advantages of "location + drug testing + cost", seize the new opportunities of import generation, and speed up the construction of warehousing and logistics.
1) Chongqing became the fourth first import port of drugs and biological products in China in 2018, and the first import port of chemicals was opened in Chongqing in 2021. The potential import pharmaceutical equipment agency market has great potential. 2) the "China-Europe train + pharmaceutical bonded warehouse" attracts in-depth cooperation among foreign enterprises. The company's Heping Logistics Center was put into operation in 2018. AstraZeneca PLC and Pfizer Inc have an average daily volume of 100000 and 60,000 pieces in the warehouse, respectively. 3) the logistics layout of the company is perfect, and it has the ability to radiate the distribution service throughout the country. In May 2022, the landlord (Phase II) was completed and put into production, and the annual handling capacity is expected to increase to 30 billion yuan, greatly improving the overall logistics processing capacity of the company.
Based on Chongqing, consolidate the western region, advance into the Central Plains, and move towards the whole country. The leading position of the region is stable, and "endogenous growth + epitaxial mergers and acquisitions" promote the steady expansion of the national sales network. At present, the company ranks first in market share in Chongqing, Qinghai, Gansu, Tibet and other regions. Grade 3A has achieved 80% coverage in Chongqing and 60% in secondary hospitals. By the end of 2021, the company has more than 200 sub-holding subsidiaries at full level, and the scope of wholesale business reaches 27 provinces (cities). The strategic goal of "300 cities" is put forward in the 14th five-year Plan: in addition to completing the blank layout of provincial capitals, complete the goal of newly established or mergers and acquisitions of enterprises in more than 300 prefecture-level cities across the country.
Strategic optimization of product structure, high gross margin of medical device performance growth faster than expected. The medical device income in 2021 was 7.56 billion (+ 51.9%), and the medical device income CAGR in 2018-2021 was as high as 89.4%. In 2021, the gross margin of medical devices was 1.33 billion (+ 94.7%), and the proportion of gross profit increased to 23.3% CAGR of medical devices in 2018-2021 reached 110.9%. In 2021, we will strengthen the business expansion of the medical device circulation market nationwide through the merger and acquisition of 2 subsidiaries and 4 new companies. The company strives to achieve 20 billion of medical device revenue in 2025, with a compound growth rate of 32.1% from 2020 to 2025.
Profit forecast and investment advice. It is estimated that the company's return net profit will grow at a compound annual rate of 10.7% from 2022 to 2024.
The company has the advantage of wholesale and zero integration, and is currently in a period of rapid expansion of the national business layout, covering it for the first time and giving it a "buy" rating.
Risk hints: the risk of fluctuation of investment income of associated enterprises; the risk that M & An enterprises do not meet expectations; the increase of financing costs; the risk that the payback of terminal hospitals is less than expected.