\u3000\u3000 Lbx Pharmacy Chain Joint Stock Company(603883) (603883)
Event: fixed growth was fully implemented to help the development of the company
On February 11, 2022, Laoshi surnamed issued a fixed increase report. It issued 39.9278 million A-Shares in a non-public offering, with 20 issuing objects, an issuance price of 43.59 yuan / share and a net financing of 1.725 billion yuan. The fixed increase is mainly used for the construction of new stores, supplement of working capital, enterprise digital platform and new retail projects, Huadong Medicine Co.Ltd(000963) product sorting and processing projects.
Store growth accelerated, boosting the company’s scale growth
The financing of 573 million yuan is proposed to be used for the new chain drugstore project, which is conducive to the growth of the company’s scale. The newly-built projects are mainly in 15 provinces and cities, with a total of 1680 new stores. The implementation cycle is 3 years. The funds raised this time account for about 42.65% of the total project investment. We believe that the improvement of concentration is still the core trend of chain drugstores, and the leaders of major drugstores are actively layout to accelerate the expansion of stores. From 2019 to 2020, Lbx Pharmacy Chain Joint Stock Company(603883) added 1264 / 1405 stores respectively, with a net growth rate of 32.7% and 27.4% respectively, ranking first among the four chain pharmacies. In the first three quarters of 2021, the company added 1866 stores, with an obvious acceleration trend. We expect that in 2022, the company will maintain the growth of more than 2000 companies (including direct operation and franchise), with the corresponding revenue growth rate of about 23%.
Optimize the capital structure and help the company develop steadily
The financing of 522 million yuan is intended to supplement working capital, which is conducive to the sustainable and stable development of the company. With the acceleration of M & A and self construction of the company, the asset liability ratio of the company has increased rapidly. In 2021, the asset liability ratio of Q3 company was 57.18%, much higher than the average value of comparable companies in the same industry of 46.55%. This fixed increase ensures the company’s reasonable cash flow level, is conducive to optimizing the company’s capital structure and ensuring the sustainable development of the company.
Develop digital and new retail to help improve the competitiveness of the company
The financing of 366 million yuan is intended to be used for the construction of digital platform and new retail, which is conducive to the company’s core competitiveness. With the rapid development of digital and new retail, traditional pharmacies need to actively transform to enhance the competitiveness of the company. We believe that digital transformation is an effective way for the company to deal with the rise of Internet drug sales. On the one hand, through the digital management system, we can improve the efficiency of store management and drug SKU management and improve the level of gross profit margin; On the other hand, through accurate drug recommendation and chronic disease management, we can increase the passenger flow and customer stickiness and improve the soft power of the company.
Profit forecast and valuation
As the epidemic situation in 2021 has a great impact on the revenue of chain pharmacies, and Hebei Huatuo pharmacy did not complete the consolidation in 2021, we expect to complete it in 2022. We lowered the profit forecast. From 2021 to 2023, the operating revenue was 15.709/19.339/23.239 billion yuan respectively, with a year-on-year increase of 12.48%, 23.11% and 20.16% respectively; The net profit attributable to the parent company was 687 / 836 / 1003 million yuan respectively, with a year-on-year increase of 10.65%, 21.61% and 19.96% respectively; The corresponding EPS is 1.67/1.85/2.22 yuan respectively.
Risk tip: the risk of intensified industry competition; The risk that the store expansion is less than expected; The risk of continuing the epidemic; The risk that the price reduction of centrally purchased drugs exceeds the expectation; Risk that the scale growth of the pharmaceutical industry is less than expected
