Event: The company released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved revenue of 6.5 billion yuan (+38%); net profit of 270 million yuan (+42%); net profit of 270 million yuan (+37.3%) after deducting non-return net profit of 270 million yuan (+37.3%). In 2023Q3, the company achieved revenue of 2.16 billion yuan (+27%); net profit of 120 million yuan (+13.9%); net profit of 120 million yuan (+11.7%) after deducting non-return net profit of 120 million yuan (+11.7%).
“Self-build+Acquisition” two-wheel drive, steady expansion of stores. The company's stores cover six provinces and cities in Yunnan, Sichuan, Chongqing, Guangxi, Hebei and Liaoning. Adhering to the expansion strategy of “penetrating downward with central cities as the core”, it initially formed a pattern of deep cultivation in Yunnan, based in the southwest, and development towards the whole country. As of the end of 2023Q3, the total number of stores of the company was 4711, up 16.18% from the beginning of the year and 18.28% from the previous year. In the first three quarters, the company built 603 stores of its own and acquired 61 stores. Due to development plans and business strategy adjustments, 8 stores were closed, a net increase of 656 stores.
The new store and the second new store lay the foundation for continued development in the future. As of September 2023, the number of company stores was 4,711, 684 new stores within one year, accounting for 14.5%, 449 new stores under two years old, accounting for 9.5%. The total number of new stores and sub-new stores was 1,133, accounting for 1,133 new stores, the share fell from 28.4% in the same period last year to 24.1%; the total number of stores over two years (including the merger of sporadic acquisition projects) was 3,578, accounting for 76%.
Affected by policies, category restructuring has been adjusted, and the outflow of prescription drugs has been actively accepted. From January to September 2023, through category planning adjustments, the company actively undertook incremental business brought about by the long-term trend of outflow of customers from hospitals. The sales revenue of prescription drugs and non-prescription drugs increased by 47.9% and the structural share increased by 4.7% (including the impact of Tangren Pharmaceutical's inclusion in the consolidated report); the company responded positively to the temporary decline caused by the adjustment of health insurance policies for health products and other categories, firmly serving consumers' demand for health products, and sales revenue of Chinese herbal medicines, health food, personal care products, and medical devices increased by 18.9%.
Profit forecasts and investment advice. Net profit for 2023-2025 is estimated to be 420 million yuan, 520 million yuan, and 620 million yuan respectively. The corresponding year-on-year growth rates are 14.5%/23.8%/20%, respectively, maintaining the “hold” rating.
Risk warning: industry policy risk, increased market competition risk, risk of new stores falling short of expectations.