Event: The company released its 2024 quarterly report, and the distribution sector grew steadily.
2024Q1 achieved operating income of 19.090 billion yuan, up 2.16% year on year; net profit to mother of 389 million yuan, up 7.33% year on year; net profit after deducting non-return to mother of 370 million yuan, up 5.10% year on year. By business sector, in the first quarter, the distribution sector achieved revenue of 13.954 billion yuan, a year-on-year increase of 6.77%, and achieved net profit of 240 million yuan, an increase of 10.07%; the retail sector achieved operating income of 5.387 billion yuan, a year-on-year decrease of 8.30%; and realized net profit of 77 million yuan, a year-on-year decrease of 49.94%. The company's distribution sector achieved steady growth in the first quarter. The decline in retail sector performance was mainly due to the retail sector's high sales volume of emergency supplies such as physico-chemical diagnosis and masks during the same period last year. At the same time, some regions were affected by policies such as outpatient coordination, which led to a year-on-year decline in performance.
The cost rate was slightly reduced during the period, and profitability increased.
In the first quarter of 2024, the company achieved a gross margin of 10.86% /-0.56pct, a net profit margin of 2.04% /+0.10pct, and an expense ratio of 8.20% /-0.20pct for the period. Among them, sales, management, R&D, and financial expenses were 6.61% /-0.14pct, 1.32% /-0.10pct, 0.03% /+0.02pct, and -0.24% /+0.01pct, respectively. Overall, the company's expense ratio was optimized in the first quarter, and profitability improved.
Commercial distribution channels and variety layout have expanded, and the number of National University pharmacy stores has continued to break through.
The company is based on two broad bases and has obvious advantages in its distribution business. The layout of its national pharmacy continues to advance, and the integrated distribution layout is at the forefront of the industry. Furthermore, the company's innovative business focuses on digital transformation and upgrading, and the “one, two wings” strategy continues to accelerate. By the end of 2023, the company's distribution business segment covered 1,110 secondary and tertiary medical institutions in Liangguang, 8,373 primary care customers, 6155 retail terminal customers (chain pharmacies, single stores, hospital self-funded pharmacies), with abundant downstream channel resources. In terms of new product introduction, it introduced 13 innovative manufacturers, 35 innovative drugs (exclusive 5), 29 hospital first orders, 71 first pharmacy orders, 11 dual-channel first orders, obtained 5 national general distribution varieties and 32 exclusive distribution varieties; Big pharmacy door The total number of stores reached 10,516, including 8528 direct-run stores, 1988 franchise stores, 232 DTP pharmacies, and 97 new DTP varieties. Guoda Pharmacy has obtained 7,736 designated medical insurance qualifying stores, accounting for 91% of the company's total number of direct-run stores, 397 dual-channel stores, and 3012 health insurance co-ordinated stores. Furthermore, according to the company's investor relations records, in 2024, Guodai Pharmacy is expected to increase the net number of stores by about 10% each year (not counting future investment mergers and acquisitions). The future is worth looking forward to .
Investment advice:
Buy-A investment rating, 6-month target price of 41.18 yuan. We expect the company's revenue growth rates from 2024 to 2026 to be 6.55%, 6.34%, and 6.94%, respectively, and net profit growth rates of 10.23%, 10.17%, and 9.82%, respectively; for the first time, the 6-month target price was 41.18 yuan, which is equivalent to 13 times the dynamic price-earnings ratio of 2024.
Risk warning: the risk of policy changes in the pharmaceutical industry, the risk that retail business layout progress falls short of expectations, and increased competition in the industry.