Items:
The company released its three-quarter report in 2023, with an income of 17.723 billion yuan (+ 19.61%) and a net profit of 1.174 billion yuan (+ 27.2%). In the third quarter alone, the company's revenue was 5.731 billion yuan (+ 12.44%) and its net profit was 257 million yuan (+ 22.9%).
Comments:
Steady growth on the revenue side. In the first three quarters of 2023, the company's revenue was 17.723 billion yuan (YOY+19.61%), maintaining rapid growth. From a regional point of view, the income is 11.95 billion yuan (YOY+12.69%) in South China, 1.661 billion yuan (YOY+13.65%) in Central China, 1.272 billion yuan (YOY+30.92%) in East China, and 2.365 billion yuan (YOY+70.91%) in Northeast, North, Southwest and Northwest China. The company ploughs South China, through self-construction, mergers and acquisitions and direct operation to join the troika, continue to promote the encryption of strong areas and breakthroughs in weak areas, and continue to expand blank areas, actively promote expansion outside the province, and achieved a high growth rate of 70.91% in Northeast, North China, Southwest and Northwest regions.
The franchise and distribution business is growing rapidly, and the Chinese and Western proprietary medicines are growing steadily. From a sub-business point of view, retail business income 14.903 billion yuan (YOY+12.04%), gross profit margin 39.07% (- 0.4pct), accounting for 86.41%, franchise and distribution business income 2.344 billion yuan (YOY+109.36%), gross profit margin 11.51% (+ 2.33pct), achieving rapid growth. According to the products, the income of proprietary Chinese and western medicines is 12.742 billion yuan (YOY+20.87%), the gross profit margin is 32.03% (- 2.11pct), the income of Chinese ginseng medicinal materials is 2.082 billion yuan (YOY+16.16%), and the income of non-drugs is 2.423 billion yuan (YOY+16.12%).
The nationalization strategy has been promoted in an all-round way, and the advantage of scale has been highlighted. As of September 30, 2023, the company has a total of 12993 stores (including 3688 franchise stores). During the reporting period, there was a net increase of 2948 stores, covering 19 provinces, municipalities and autonomous regions across the country, including 1019 new stores, 427 acquired stores, 1681 franchise stores and 179 closed stores. The company has become the largest chain drugstore enterprise in South China and the top three chain drugstore enterprises in China. The store coverage has been continuously expanded to new provinces and cities, achieving sustainable growth of business scale and gradually moving towards the strategic goal of nationalization.
Investment advice: according to the company's latest operating situation, we expect the company's 23-25 net profit to be 13.02,16.87 and 2.111 billion yuan, an increase of 25.7%, 29.6% and 25.1% over the same period last year. With reference to the valuation of the comparable company, it will be given 30 times PE in 2023, corresponding to the target price of 34.20 yuan. Maintain the recommended rating.
Risk tips: Internet e-commerce impact, personal health insurance accounts become stricter.