Matters:
The company issued a positive profit forecast on May 5, 2023. As of March 31, 2023, the company achieved an annual net profit of no less than 450 million yuan, and realized a net loss of about 266 million yuan for the same period in 2022.
Commentary:
The company has reversed its annual losses, and its profitability has been shown. The main reasons why the company turned a loss into a profit in 2023 were:
(i) The company is deeply involved in improving pricing capacity and optimizing operating efficiency brought about by refined operations and digital upgrades; and (ii) the company continues to improve the healthcare service process and product experience, and users' mentality in purchasing drugs on the platform has been strengthened.
Industry bathing policies and the rising sun of the times. The country lifted restrictions on online sales of prescription drugs, accelerated the “outflow of prescriptions”, and the liberalization of policies such as medical insurance reimbursement for outpatient patients and drug expenses. The rapid development period of pharmaceutical e-commerce has arrived. In addition to prescription drugs, non-pharmaceutical health products are similar to consumer goods, and are suitable for online sales; we believe that pharmaceutical e-commerce development prospects are broad. The company relies on the strong e-commerce resources of Alibaba. The company maintains rapid growth, and the company's leading position in pharmaceutical e-commerce is stable.
Optimistic about the company's long-term development and maintain the “recommended” rating. In the future, the company's pharmaceutical e-commerce business is expected to continue to lead the industry, and the healthcare and digital service business has great potential for growth. Based on the actual situation in 2022, we adjusted the company's revenue forecasts for the 2023-2025 fiscal year to 25.337, 307.61 and 37.431 billion yuan respectively (the previous forecast values for the 23-25 fiscal year were 266.82, 347.67 and 45.718 billion yuan), with year-on-year growth rates of 23.0%, 21.4% and 21.7% respectively; the net profit forecast of Guimu was 481 million, 718 and 861 million yuan respectively, with year-on-year growth rates of 281.2%, 49.1% and 20.1% respectively. Referring to JD Health and Peace Doctor, we used P/S for valuation. Based on the company's history and industry trends, we gave the company 2.8 times the target P/S for fiscal year 2024, corresponding to HK$7.24, maintaining the “recommended” rating.
Risk warning: Stricter regulations on online sales of prescription drugs, business expansion falls short of expectations, etc.