Shandong drugstore market leader, the region deep ploughing steady expansion. Shu Yu civilian was founded in 1999, over the years deeply ploughed pharmaceutical retail chain business, adhere to the steady expansion policy based on Shandong, the business scale continues to expand, influence and popularity rise rapidly. In 2020, the company's operating income was 4.64 billion yuan, of which retail business income was 4.191 billion yuan, accounting for about 11.36% in Shandong provinces and cities, ranking first. From 2018 to 2020, the company achieved operating income of 2.887 billion yuan, 3.467 billion yuan and 4.64 billion yuan respectively, with a compound growth rate of 26.77%. The net profit from 2018 to 2020 is 113 million yuan, 111 million yuan and 216 million yuan respectively, and the compound growth rate of net profit is 38.16%.
Shandong Province is the second largest drugstore market in China, with high population and GDP resources. According to the Seventh National population Census of the State Council, Shandong Province has a population of 102 million (second), a GDP of 7.31 trillion (third) in 2020, and a per capita disposable income of 32900 yuan (eighth). There is a great demand and potential for drug consumption. As of December 31, 2020, the company's marketing network has covered 15 prefectures and cities in Shandong Province (15Compact 17), with a total of 1851 direct chain stores, of which 1583 stores have designated qualifications for health insurance. The company continues to optimize in three aspects: intelligent information system and intelligent warehousing and logistics system technology, Internet + drug circulation mode and DTP professional pharmacy, which provides important technical and service support for chain store expansion, logistics and distribution.
The retail drugstore industry has large incremental space, accelerated stock integration, and high leading growth and certainty. Prescription outflow trend is determined, collection, overall account docking and other policies to promote the chain drugstore leader is stronger. With the acceleration of stock integration and the slowing down of the endogenous growth of the industry, the drug circulation industry will enter a new round of extension M & A cycle, and the industry concentration will continue to improve, which will be good for leading drugstores. The entry of e-commerce to accelerate the outflow of prescriptions and the increase of industry concentration may affect the evolution of the long-term pattern of the industry. Ali Health bought a stake in Shu Yu civilian (8.41% after the issue) and played a synergistic effect in O2O and B2C business.
Profit forecast: the company's endogenous growth is strong, and as the fund-raising projects continue to land, the company is on the fast track of expansion. We estimate that the EPS of the company from 2021 to 2023 will be 0.66 yuan, 0.82 yuan, 1.03 yuan respectively, corresponding to the closing price on July 9, 2021, the PE will be 35.9,28.9 and 23.1 times, respectively. Coverage for the first time, giving a "prudent overweight" rating.
Risk hints: market competition aggravates the risk, consumers' drug purchasing habits change risk, expansion and integration is less than expected risk, drug price reduction risk.