Matters:
The company released its 2023 annual report: achieved revenue of 22.588 billion yuan (+13.59%), net profit attributable to mother of 1,412 billion yuan (+11.90%), and deducted non-net profit of 1,362 billion yuan (+10.92%).
In the fourth quarter, revenue of 6.70 billion yuan (+2.47%) was achieved, net profit attributable to mother was 413 million yuan (-5.81%), and non-net profit of 395 million yuan (-9.25%) was deducted.
Company distribution plan: The company plans to distribute a cash dividend of RMB 0.5 (tax included) per share, adding 0.2 shares. In total, it is proposed to distribute a total discovery dividend of 505 million yuan (tax included), an increase of 202 million shares.
The company released its 2024 quarterly report: achieved revenue of 59.71 yuan (+13.39%), net profit of 407 million yuan (+20.89%) to mother, deducted non-net profit of 399 million yuan (+24.26%).
Ping An's point of view:
The pace of store expansion is steady: In 2023, through the “new opening+merger+acquisition+franchise” store expansion model, the company deeply cultivated the Central and South East China North China market, adding 3196 stores, including 1,613 self-built stores, 559 mergers and acquisitions, 1,024 franchised stores, and closed 153 stores. By the end of the reporting period, the total number of the company's stores was 13,250 (including 2,986 franchisees), a net increase of 2,982 stores over the end of the previous period. In the first quarter of 2024, the company added 701 stores, including 364 self-built stores, acquired 166 stores, added 171 new affiliate stores, and closed 23 stores. By the end of the reporting period, the total number of the company's stores was 13,920 (including 3,157 franchisees), a net increase of 670 over the end of the previous period. The company's active layout and steady expansion of stores have laid the foundation for the company's long-term growth.
The company's pharmacy capacity has improved, and the number of co-ordinated stores has grown rapidly: by the end of 23, the company had 675 hospital side stores (within a straight line distance of 100 meters), 305 DTP pharmacies, of which 246 dual-channel medical insurance stores have been opened, more than 4,200 outpatient co-ordinated medical insurance pharmacies, managed more than 250 drugs under national health insurance agreements, and established deep partnerships with more than 150 professional prescription drug suppliers. The company's pharmaceutical capacity has improved, the number of co-ordinated stores has grown rapidly, and its ability to accept outflow prescriptions has been continuously strengthened.
Maintaining the “Recommended” rating: The company's stores are distributed in the central and southern core regions and economically developed regions of East China. They have geographical advantages. Under vigorous expansion, revenue and profit have maintained rapid growth over the years. Currently, there is still plenty of room for expansion in the advantageous regions where the company is located. The intensive layout phase will bring better scale effects, and profitability is also expected to increase. Considering the pace of mergers and acquisitions, we adjusted the company's profit forecast. The company's net profit for 2024-2026 is estimated to be 1,758 billion yuan, 2.154 billion yuan, and 2,597 billion yuan respectively (the original forecast net profit for 2024-2025 was 1,885 billion yuan and 2,319 billion yuan). As a leading enterprise in the pharmacy sector, the company still has broad room for future growth, and the promotion of coordinated health insurance policies will further increase the revenue side and number of patients. We maintain a “Recommended” rating.
Risk warning: 1. Risk of changes in industry policies: Advancement of medical reform policies may have an impact on company performance. 2. Risk that the progress of mergers and acquisitions does not meet expectations: If an unexpected situation occurs in the company's mergers and acquisitions integration, the performance of acquired stores may fall short of expectations. 3. Drug safety risks: If there is negligence in some aspect of quality control in pharmaceutical distribution, it may pose a drug safety risk.