Key points of investment
Jianzhijia released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved operating income of 6.5 billion yuan, an increase of 38.03% over the previous year; net profit of 278 million yuan, an increase of 42.03% over the previous year; net profit after deducting non-return net profit of 271 million yuan, an increase of 37.26% over the previous year. In 2023Q3, the company achieved operating income of 2.162 billion yuan, an increase of 26.96% over the previous year; net profit of 120 million yuan, an increase of 13.94% over the previous year; net profit after deduction of 116 million yuan, an increase of 12.63% over the previous year.
Store expansion is progressing in line with expectations, and stores are maturing one after another and entering a period of performance release. In the first three quarters of 2023, the company added 603 self-built stores, and acquired 61 new stores, with a net increase of 656 stores. The total number of stores at the end of 2023Q3 reached 4711, an increase of 16.18% over the beginning of the year. Stores in Sichuan, Chongqing, Guiji, and Liao grew rapidly. The number of stores reached 1,702, an increase of 24.32% over the beginning of the year, and the number of stores increased to 38.81%. As of the end of 2023Q3, the company had 684 new stores within one year, accounting for 14.52%, 449 new stores within two years, accounting for 9.53%, and a total of 1,133 new stores and sub-new stores. The share fell to 24.05% from 28.42% in the same period last year.
Actively adjust category planning, strengthen product introduction, and undertake an increase in the outflow of prescriptions. In the first three quarters of 2023, the company's proprietary Chinese and Western medicines achieved revenue of 4.643 billion yuan, a year-on-year increase of 47.91%, accounting for 75.27%, a year-on-year increase of 4.65pp (including the impact of Tang people included in the consolidated report). Among them, prescription drug revenue was 2,241 billion yuan, up 55.89% year on year, revenue accounted for 36.32%, and gross margin was 22.63%, down 0.61 pp year on year.
Profit forecast and investment suggestions: The company is deeply involved in the Yunnan and Hebei markets, and is gradually strengthening its layout in Sichuan, Chongqing, Gui, and Liaoning. The store age structure is young, and the growth momentum is sufficient. We expect the company's EPS for 2023-2025 to be 3.18, 3.99, and 4.98 yuan respectively, and the PE corresponding to the stock price on November 9, 2023 will be 17.6X, 14.0X, and 11.2X, respectively, covering the first time, and giving it an “increase in holdings” rating.
Risk warning: Health insurance policy changes have exceeded expectations, expansion and integration have fallen short of expectations