Finance Association, April 26 (Reporter Huang Lu) Due to a one-time tax supplement, the net profit of Yixintang (002727.SZ), which crossed the 10,000 store threshold, fell sharply in 2023. The company said that the tax supplement is a profit and loss caused by a one-time accident and is included in non-recurring profit and loss.

Yixintang released its 2023 report tonight. Last year, the company achieved operating income of 17.380 billion yuan, down 0.29% from the previous year, which was basically the same; net profit attributable to shareholders of listed companies was 549 million yuan, a year-on-year decrease of 45.61%. Among them, the company's pharmaceutical retail and wholesale business accounted for 72.66% and 22.45% of revenue respectively. Last year, drug retail revenue fell 7% year on year, and gross margin decreased 2.54 percentage points year on year.

As of December 31, 2023, the company and its wholly-owned subsidiaries have a total of 10,255 direct-run chain stores, covering 10 provinces and municipalities. Among them, the number of stores in Yunnan Province accounted for 52.63%, and the number of stores outside Yunnan Province accounted for 47.37%.

Isshintang said a few days ago that the company opened 1,381 new stores last year, a net increase of 1,049. The opening of a large number of new stores led to an increase in operating costs. At the same time, demand for cold products such as fever relief, cough relief, and anti-virus products operated by the company's retail stores declined in 2023, leading to a decline in revenue for such products in the same store in 2023.

However, the reason for the sharp decline in the company's net profit in 2023 is mainly due to the company's large tax compensation and late tax fees. In 2023, the total amount of corporate tax supplements and tax arrears was about 240 million yuan. In 2023, Yixintang accepted the local competent taxation bureau to carry out tax counseling work on the tax situation from 2020 to 2022. Rent fees for independent tax stores were uniformly signed by the headquarters to calculate and pay value-added tax and additional tax in accordance with relevant regulations treating sales, etc., and a late fee of 5/10,000 per day will be charged on a daily basis from the date of late payment of taxes.

The company revealed in its annual report that subsequent companies can avoid the occurrence of such taxes and late fees by revising business processes, signing rent contracts with independent tax stores, etc., and directly obtaining rent invoices from independent tax stores. Therefore, the company identified these tax supplements as profits and losses caused by a one-time incidental incident and included them in non-recurring profits and losses.

The company also released its 2024 quarterly report. In the first quarter of this year, the company achieved operating income of 5.1 billion yuan, an increase of 14.96% over the previous year; net profit attributable to shareholders of listed companies was 242 million yuan, an increase of 1.03% over the previous year. As of the end of the first quarter of this year, the number of company stores was 10,746.

The company revealed that in the future, it will comprehensively increase its market share in the Southwest China, with a focus on South China and North China regions. In addition, the company uses the store's existing space to develop incremental innovation businesses such as lottery, personal care and beauty, health food, and massage for the blind.