Event: the company publishes its 2023 semi-annual report. 2023H1 realized income of 40.72 billion yuan (+ 24.6%), net profit of 510 million yuan (+ 28.1%), and non-return net profit of 470 million yuan (+ 43.7%).
2023Q2 realized income of 21.1 billion yuan (+ 25.6%), net profit of 350 million yuan (+ 20.3%), and non-return net profit of 330 million yuan (+ 20.4%).
The performance grew steadily in the second quarter, and the growth rate of the equipment sector was bright. 1) classified by business sector: the income of 2023H1 pharmaceutical wholesale sector is 39.03 billion yuan (+ 24.4%), accounting for about 95.9%, and the gross profit margin is 7.8%. The gross profit margin of 2023H1 retail sector is 1.55 billion yuan (+ 26.7%), accounting for about 3.8% of the company's operating income and 21.1% of gross profit. 2) classified by operating products: 2023H1's pharmaceutical sector has an income of 33.12 billion yuan (+ 17.9%) and a gross profit margin of 7.5%, of which western medicine income is 31.22 billion yuan (+ 18%), accounting for 76.7%; hemp essence income is 1.4 billion yuan (+ 44.4%), accounting for 3.5%; traditional Chinese medicine income is 490 million yuan (+ 28.3%), accounting for 1.2%. The income of the equipment sector is 6.67 billion yuan (+ 65.7%), accounting for 16.4%, with a gross profit margin of 12.1%. 3) classified by region: the income of 2023H1 outside Chongqing is 27.42 billion yuan, and the proportion of income outside Chongqing has increased to 67.4%, which is 3.91% higher than that at the end of 2022.
We will accelerate the layout of commercial networks across the country, and 2023H1 will add nine prefecture-level cities to the market. By the end of 2023H1, the company's commercial network has covered 30 provinces (municipalities, autonomous regions and special administrative regions) and has more than 220 subsidiaries. The company continues to promote the 300th city plan of the 14th five-year Plan, and 2023H1 adds 9 prefecture-level markets in Zunyi, Bijie and southwest Guizhou, with business involving drugs and devices. With the gradual increase of market coverage in prefecture-level cities, further strengthen the expansion of drug circulation and medical device circulation market. By the end of 2023H1, the company had cumulatively promoted 87 SPD projects in the categories of drugs, equipment consumables and Internet hospitals, an increase of 24 over the same period, and nearly 80 medical institutions, an increase of 18 over the same period.
Retail plate "self-management + join" two-wheel drive, relying on the advantage of wholesale integration, DTP pharmacy growth rate is eye-catching.
By the end of 2023H1, the company had 923 retail stores (122 DTP pharmacies and 801 community health pharmacies), an increase of 117 over the previous year. The company has more than 70 "dual-channel" stores of health insurance, an increase of 11 over the previous year, and more than 30 stores with special diseases, covering 26 districts and counties in Chongqing. Sales of 2023H1 DTP prescription pharmacies increased 39% year on year. DTP pharmacies cover 18 provinces and cities across the country. The company's retail sector has achieved integrated online and offline operations, and sales of 2023H1 online platforms have increased by about 76% compared with the same period last year.
Optimize the business structure and build the development engine. 1) actively promote the business of high-hair equipment. 2023H1 continues to promote the construction of equipment SPD project. At present, it has carried out a total of 14 equipment projects, with a sales scale of about 550 million yuan. In the future, the company will firmly grasp orthopaedics, assisted reproduction, disinfection supply and other market segments, build equipment market segmentation platform, actively promote SPD projects, and expand market share. 2) deepen the circulation business of traditional Chinese medicine and extend the industrial chain upstream. About 140 companies under the company have qualifications for the management of traditional Chinese medicine and prepared pieces of traditional Chinese medicine, and about 120 have carried out the business of traditional Chinese medicine. In addition, the company has a stake in a traditional Chinese medicine formula granule manufacturing enterprise in Chongqing (the factory construction was completed and trial production began in November 2023), and a traditional Chinese medicine slices production enterprise in Hangzhou (put into production and operation in February 2023, the production capacity is 5000 tons / year).
Profit forecast and investment advice. With the deepening of the reform of state-owned enterprises, the company has continuously optimized the industrial structure and activated the momentum of enterprise growth based on the general strategic guiding ideology of "1200 double three hundred cities, Sanhua four Energy and five Route Army". It is estimated that the net profit from 2023 to 2025 will be 1.13 billion yuan, 1.3 billion yuan and 1.51 billion yuan respectively, with a year-on-year growth rate of 18.8%, 14.6% and 16.7%, respectively, and the corresponding PE is 8-7-6 times. Maintain a "buy" rating.
Risk tips: mergers and acquisitions may not meet expectations; risk of rising financing costs; risk of collection and reduction of prices; rebates may fall short of expectations.