Events:
The company recently released a semi-annual report on 2023, 2023H1 realized income of 4.261 billion yuan (+ 25.71%), net profit of 139 million yuan (+ 24.67%), and non-return net profit of 132 million yuan (+ 24.55%). 2023Q2 realized income of 2.189 billion yuan (+ 21.43%) in a single quarter, net profit of 74 million yuan (+ 20.05%), and non-return net profit of 72 million yuan (+ 33.80%).
Comments:
Deep ploughing Shandong market, continuous improvement of business density; development of non-provincial markets, three-dimensional layout of the marketing network. By the end of the reporting period, the company had 6332 retail pharmacies (net increase of 876, + 16.06% at the end of last year), including 3868 self-operated stores (net increase of 543, + 16.33% at the end of last year) and 2464 franchise stores (net increase of 333, year-on-year end + 15.62%). During the reporting period, the company expanded its stores in Shandong market, accounting for 35.36%. The franchise business has expanded rapidly in Shandong, Hebei and Jilin provinces, and has newly entered the Chongqing market. Shu Yu Health joining Network has now covered 14 provinces, autonomous regions and municipalities directly under the Central Government, including Heiji, Liaoning, Shanxi, Hebei, Shandong, Henan, Jiangsu and Anhui, and covered a total of 50 prefecture-level cities across the country. From January to June 2023, the company's distribution revenue from franchisees increased by 70% compared with the same period last year. 2023Q2 retail drugstores added 291 stores in a single quarter, we believe that in the first half of 2023, the company will continue to adhere to the marketing model of direct chain and the steady expansion strategy of regional deep ploughing, through the development strategy of "self-construction + M & A + joining", to help improve the management efficiency of the company, the company's future profit trend is stable and the key indicators: ping efficiency and store efficiency decline slightly. The average daily efficiency of 2023H1 (income / business area) is 49 yuan per square meter, and that of 2022H1 is 57 yuan per square meter, with a slight decline; the average daily efficiency of 2023H1 (revenue / business days) is 5733 yuan, and that of H1 is 6242 yuan in 2022. After the epidemic, retail pharmacies are still affected by residual temperature, and the operating efficiency of stores remains relatively stable.
Product regulations: 2023H1 realized revenue of 4.261 billion yuan (+ 25.71%), retail business revenue of 3.809 billion (+ 29.43%), gross profit margin of 31.09% (+ 0.83%), wholesale and other business revenue of 452 million (+ 1.12%).
The main reason is that the company joined Tuodian in the first half of the year, and there is still a lot of room for wholesale and other business growth in the second half of the year. From the perspective of specific regulations, 2023H1 achieves a revenue of 3.154 billion (+ 29.34%) and a gross profit margin of 24.63% (+ 1.40%). The company attaches importance to the development of traditional Chinese medicine, devotes itself to the development and promotion of high-quality authentic traditional Chinese medicine, and cooperates with the competent government departments in charge of the place of origin of traditional Chinese medicine to build authentic original traditional Chinese medicine departments, while actively undertaking prescription outflow and realizing the growth of Chinese and Western proprietary medicine regulations. The 2023Q2 sales expense rate is 22.09% (+ 1.37pcts), and the management expense rate is 3.75% (+ 0.70pcts). The relatively large increase in expense rate is due to the rapid expansion of the scale, the needs of store expansion for sales and management, in order to meet the needs of different consumer groups, achieve diversified product layout, and rapidly improve category sales, the company develops and constantly improves the commodity system based on omni-channel, diversification and the whole family. The company continues to lay out the health equipment rehabilitation product line, join hands with professional R & D team, focus on the leading enterprises in the market, and create omni-channel services for innovative product research and development, production and marketing.
Profit forecast and investment advice: it is estimated that the company will achieve an income of RMB 98.08 / 12676 million in 2023-2025, with a net profit of RMB 2.74 million and a net profit of RMB 3.54 trillion, corresponding to 1.11 yuan per share of earnings per share, corresponding to PE times that of 30-23-18, with reference to the valuation of the same industry to maintain the "overweight" rating.
Risk hint: industry policy risk, economic growth less than expected risk, performance lower than expected risk.