Revenue and profit grew steadily, and the core strategy enabled long-term development, maintaining that “buy” rating companies achieved revenue of 15.140 billion yuan in 2023 (+6.92% year over year, all the following are year-on-year scales); net profit to mother of 2.174 billion yuan (+4.27%); net profit after deducting non-return to mother of 1,960 billion yuan (+13.06%). 2024Q1 achieved revenue of $40.472 billion (-3.85%); net profit of $538 million (-4.19%); net profit after deducting non-return to mother of $522 million (-9.01%). In terms of profitability, the gross margin for 2023 was 8.07% (+0.27pct), and a net margin of 1.53% (-0.10pct). In terms of expenses, the 2023 sales expense ratio was 2.94% (+0.00pct); the management expense ratio was 1.88% (+0.06pct); the R&D expense ratio was 0.13% (+0.00pct); and the financial expense ratio was 0.79% (-0.02pct). We are optimistic about the company's development potential under the “three new and two modernizations” strategy. Considering the impact of expenses such as business promotion, we lowered the 2024-2025 and added 2026 net profit forecasts, which are estimated to be 24.45/27.78/3.194 billion yuan respectively (originally estimated 2024-2025 was 27.90/3.257 billion yuan), EPS was 0.63/0.71/0.82 yuan, and the PE corresponding to the current stock price was 12.9/11.4/9.9 times, maintaining the “buy” rating.
Digital pharmaceutical distribution and supply chain business revenue grew steadily. In 2023, the company's digital pharmaceutical distribution and supply chain business revenue was 124.042 billion yuan (+2.47%), general brand promotion business revenue of 19.584 billion yuan (+46.01%), pharmaceutical industry's own production and OEM business revenue of 2,876 billion yuan (+2.70%), new pharmaceutical retail business revenue of 2,815 million yuan (+10.95%), digital logistics technology and supply chain solutions revenue of 849 million yuan (+ 2.47%) 28.45%), revenue from value-added healthcare and technology services of 216 million yuan (+5.69%). In the general brand promotion business, general pharmaceutical brand promotion revenue was 10.696 billion yuan (+60.82%); general device brand promotion revenue was 8.888 billion yuan (+31.44%).
New pharmaceutical retail continues to advance, and the “10,000 store franchise” business is progressing smoothly. New retail and 10,000 store franchise business are an important part of the company's “three new, two modernization” strategic transformation, and are also the core of the new retail strategy. The company's Good Pharmacist “Ten Thousand Stores Join” program is currently progressing smoothly. As of 2024Q1, the company has achieved 21,192 direct management and franchise pharmacies, with stores spread across 31 provinces, cities and autonomous regions across the country. In order to better provide digital services, product management analysis and extend business scenarios to franchisees, the company is committed to developing a core system for new retail scenarios, building a digital platform for 10,000 stores in Kyushu, and fully empowering the digitalization of single pharmacies and small to medium chains.
Risk warning: Risk of policy changes, REITs fund operations fall short of expectations.