\u3000\u3 China Vanke Co.Ltd(000002) 727 Yixintang Pharmaceutical Group Co.Ltd(002727) )
The company is based in Yunnan, deeply rooted in the cornerstone of Southwest China, and its performance has grown steadily. As the leader of regional chain drugstores, the company takes Yunnan as the core, deeply ploughs the southwest and distributes the whole country. In recent years, the company has continuously increased the layout of traditional Chinese medicine products in its pharmacies, and the proportion of traditional Chinese medicine revenue has been increasing. In 2020, the company achieved a revenue of 12.66 billion yuan, a year-on-year increase of 20.8%; The net profit attributable to the parent company was 790 million yuan, a year-on-year increase of 30.8%. 3q2021 achieved a revenue of 10.5 billion yuan, a year-on-year increase of 13.6%; The net profit attributable to the parent company was 760 million yuan, up 26.5% year-on-year. In 2021, the company announced four acquisition projects, including 86 stores in Shanxi, Henan and Guangxi. It is expected to generate an operating revenue of 117 million yuan and a net profit of 9.206 million yuan in 2021.
The improvement of industry concentration is good for head enterprises, and the outflow of prescription drugs brings incremental market. The leading drugstore enterprises in the drugstore industry have significant advantages. The operation pressure of monomer and small and medium-sized chain drugstores has increased, and the gradual integration will be the development trend in the future. By virtue of its strong capital strength and management ability, the leading enterprises will become the main undertaker of the outflow of prescription drugs, obtain the incremental market, and enjoy the dividends brought by the improvement of the sales of products with rich categories and high gross profit. According to the data of the Ministry of Commerce, the market share of the four pharmacies ( Yixintang Pharmaceutical Group Co.Ltd(002727) , Yifeng Pharmacy Chain Co.Ltd(603939) , Dashenlin Pharmaceutical Group Co.Ltd(603233) and Lbx Pharmacy Chain Joint Stock Company(603883) ) has increased from 6.1% in 2016 to 10.6% in 2020.
Steady efficiency and build the company’s core competitiveness. 1) The company adheres to the regional high-density expansion mode, sinks effectively, and gradually forms the store layout structure of urban-rural integration. 2) The regional expansion of stores has been steadily promoted, from Yunnan to Sichuan and Chongqing, and then gradually distributed throughout the country; Ensure regional competitive advantage through solid direct store mode. As of the third quarter report of 2021, the company has 8356 stores. 3) Implement the member management system, enhance customer stickiness through fine management, and continuously strengthen the profitability of the company. 4) Build the business of special chronic disease pharmacy and improve the market competitiveness outside the hospital. Four in one, the company builds its core competitiveness and improves the robustness of future performance.
Investment advice
Yixintang Pharmaceutical Group Co.Ltd(002727) as the leader of Southwest chain drugstores radiating across the country, it will continue to benefit from the development of the industry. It is estimated that the operating revenue from 2021 to 2023 will be 14.585 billion yuan, 17.423 billion yuan and 20.78 billion yuan respectively, with growth rates of 15.24%, 19.46% and 19.26% respectively; It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 921 million yuan, 1.100 billion yuan and 1.356 billion yuan respectively, with growth rates of 16.55%, 19.53% and 23.24% respectively. We use the relative valuation method (P / E ratio method) to value the company. With reference to the situation of comparable companies of Listed Companies in the same industry, we give the company 17 times PE in 2022, the target price is 31 yuan, and give the company a “buy” rating for the first time.
Risk tips
Policy risk; Risk of increased competition; The progress of prescription outflow is less than expected; Risk of price limit of Medicare drugs; Store safety management risk; Impact of pharmaceutical e-commerce; Risk of shareholders’ reduction; Goodwill impairment risk.
