Steady increase in revenue, increase in scale effect, and maintain “buy” rating
In 2023, the company achieved revenue of 9.081 billion yuan (+20.84% year over year, all below); net profit to mother of 414 million yuan (+10.72%); net profit after deducting non-return to mother of 399 million yuan (+7.26%). 2024Q1 achieved revenue of 2,314 million yuan (+6.79%); net profit attributable to mother of 52 million yuan (-31.51%); net profit after deducting non-return to mother of 50 million yuan (-32.32%). In terms of profitability, gross margin was 35.88% (-0.26pct) in 2023, and net margin was 4.56% (-0.27pct). On the cost side, the 2023 sales expense ratio was 26.32% (+0.90pct); the management expense ratio was 2.17% (-0.62pct); and the financial expense ratio was 1.39% (+0.04pct).
We are optimistic about the development potential of the company's diversified business model. At the same time, considering that the company's store expansion is still progressing rapidly, and the 2026 profit forecast is estimated to be 4.88/5.80/687 million yuan respectively (originally estimated 2024-2025 was 505/645 million yuan), EPS was 3.78/4.50/5.33 yuan. The current stock price corresponding PE is 12.6/10.6/8.9 times, maintaining the “buy” rating.
The chain store layout continued to advance. The share of new stores and sub-new stores dropped slightly in 2023, 799 self-built stores were purchased, 10 stores were closed due to development plans and business strategy adjustments, and a net increase of 1,061 stores. The total number of stores reached 5,116 at the end of the period. As of 2024Q1, the total number of stores increased to 5,263, including 134 self-built stores (128 pharmaceutical retail stores and 6 convenience retail stores), acquired 14 pharmaceutical retail stores, and closed 1 store. In terms of store age structure, as of 2024Q1, there were 1,163 new stores and sub-new stores, accounting for 22.10% of total stores, a year-on-year decrease of 2.88pct.
Launch a restricted equity incentive plan to unite and promote development
The company launched the 2024-2026 restricted stock assessment plan. The number of restricted shares to be granted to a total of 261 incentive recipients is 1.7649 million shares, accounting for 1.37% of the total issued share capital. At the same time, the company-level performance assessment index is based on the 2023 results. The net profit growth rates of the audited parent company in 2024, 2025, and 2026 were not less than 15%, 36%, and 60%, respectively. The introduction of this incentive plan helps to motivate employees, enhance cohesion and competitiveness, and promote the positive development of the company's business performance.
Risk warning: Risk of policy changes. Store expansion falls short of expectations, product sales fall short of expectations.