Brief comment on performance
On October 27, 2023, the company released its third quarterly report for 23 years. In the first three quarters of 2023, the company achieved revenue of 6.5 billion yuan, year-on-year + 38.03%; net profit of 278 million yuan, + 42.03%; and non-return net profit of 271 million yuan, + 37.26% of the same period last year.
In a single quarter, the company's 2023Q3 realized revenue of 2.162 billion yuan, + 26.96% compared with the same period last year; net profit of 120 million yuan, + 13.94%; and non-return net profit of 116 million yuan, + 11.69% of the same period last year.
Business analysis
"self-building + acquisition" two-wheel drive, the pace of store expansion is steady. The company's "self-building + acquisition" two-wheel drive store expansion model continues to advance, further ploughing to the prefecture-level and county-level market in the existing area. On the basis of the merger and acquisition of 667 stores in Hebei and Liaoning at the end of August 2022, at the end of September 2023, the number of stores of the company increased by 728, an increase of 18.28 percent, and the number of stores increased by 16.18 percent over the beginning of the year.
The proportion of mature stores has increased and revenue has increased steadily. By the end of the third quarter, the proportion of new stores and sub-new stores in the company's stores had dropped to 24.05% from 28.42% in the same period last year. In the early stage, self-built stores gradually matured and continued to generate business and profit contributions; the revenue of mature stores grew steadily; and the merger and acquisition projects in Jiliao and southwestern regions were steadily integrated.
Scientifically plan category adjustment and actively undertake prescription outflow. From January to September 2023, through category planning and adjustment, the company actively accepted the incremental business brought about by the long-term trend of customer outflow in the hospital. The sales revenue of prescription drugs and over-the-counter drugs increased by 47.91%, and the proportion of structure increased by 4.65% (including Hebei Tangren Pharmaceutical Co., Ltd.) The company actively responded to the temporary decline caused by the adjustment of health products and other categories of health insurance policy, firmly serving consumers' demand for health products, and the sales income of traditional Chinese medicine, health food, personal care products and medical devices increased by 18.87%.
Earnings forecast, valuation and rating
We expect the company to achieve a net profit of 4.26,5.28 and 615 million yuan respectively from 2023 to 2025, an increase of 17%, 24% and 17% over the same period last year. The EPS of the company from 2023 to 2025 is 3.31,4.09,4.77 yuan respectively, and the corresponding PE is 15,12 and 11 times respectively. Maintain a "buy" rating.
Risk hint
Uncertainty risk of extension M & A; prescription outflow does not reach the expected risk; Internet impact risk; income area concentration risk and so on.