\u3000\u3 China Vanke Co.Ltd(000002) 727 Yixintang Pharmaceutical Group Co.Ltd(002727) )
Event: the company released the annual report of 2021, and the operating revenue, net profit attributable to the parent and net profit deducted from non attributable to the parent were RMB 14.587922/899 billion respectively, with a year-on-year increase of + 15.26% / 16.66% / 19.41%; Operating net cash flow was 1.792 billion yuan, a year-on-year increase of + 73.38%; EPS1. 56 yuan. It is proposed to distribute a cash dividend of 3.00 yuan (including tax) for every 10 shares to all shareholders, with a share payment rate of 19.41%. The performance is in line with market expectations.
Comments:
Steady growth throughout the year, and income tax affected Q4 performance: in 2021q4, the company achieved revenue, net profit attributable to the parent and net profit deducted from non attributable to the parent were RMB 4.089158/152 billion respectively, with a year-on-year increase of + 19.65% / – 15.14% / – 12.9%. The overall operation of the whole year and the fourth quarter was stable, and the decline of Q4 net profit was related to the quarterly fluctuation of income tax. In 2021, the gross profit margin of sales increased by 1.14pp to 36.96% year-on-year, the net profit margin of sales increased by 0.05pp to 6.29% year-on-year, and the operation quality increased steadily. In terms of products, Chinese and Western patent medicines, traditional Chinese medicine, medical devices and family planning disinfection products achieved revenue of 10.491/13.59/1.209 billion yuan respectively, with a year-on-year increase of + 18.72% / + 21.21% / – 11.01%. Chinese and Western patent medicines, as the basic sector, grew steadily, and the category of traditional Chinese medicine with high gross profit increased rapidly. The decline in the sales of medical devices and family planning disinfection products was related to the high base of epidemic prevention in 2020.
The expansion of stores is accelerated, and a breakthrough in Sichuan and Chongqing is imminent: by the end of 2021, the total number of stores of the company was 8560, with a year-on-year increase of + 19%, a net increase of 1355 compared with the end of 2020, including 1603 newly opened stores, 156 relocated stores and 92 closed stores, which significantly improved the speed of store expansion. The company adheres to the comprehensive three-dimensional in-depth layout strategy. In addition to promoting the sinking and penetration in Yunnan Province, the company focuses on deep cultivation in Sichuan and Chongqing, and promotes the encryption and management optimization of stores. At the end of the reporting period, the number of stores in Sichuan and Chongqing was 1407, with a year-on-year increase of + 22%, which is expected to jump to the leading local pharmacy. In 2021, the layout outside the province was increased. At present, the total number of stores outside the province has reached 42%, an increase of 1.76 PCT.
Innovative business formats, e-commerce, lottery, pharmaceutical cosmetics and other business highlights: in 2021, the total sales of the company’s e-commerce business was 380 million yuan, a year-on-year increase of + 93%, of which o2o and b2c sales accounted for 80% / 20% respectively. By the end of 2021, the company had 8291 o2o stores, with a year-on-year + 72.16%, and the coverage rate was as high as 96.86% of the total number of stores. In October 2021, the company established an innovation business department to introduce lottery business. At present, Yunnan and Guangxi stores have been successfully launched, which is expected to achieve customer drainage and business growth. In 2021, the company made a breakthrough in the development of drugstore. At present, nearly 300 drugstores have been opened, and the progress has exceeded the market expectation. Compared with the number of stores with the same caliber in 2020, the sales volume of individual care projects of drug and makeup stores in Yunnan Province is + 40.43% year-on-year, and it is expected to continue to increase its performance in the future. In addition, the company is also in the layout of convenience stores and traditional Chinese medicine formula granule business, diversified business model and brand differentiation.
Profit forecast, valuation and rating: the company is the leader of chain pharmacies in Southwest China, and its operating efficiency has been significantly improved. Considering the adverse impact of the multi-point spread of the national epidemic on the business activities of pharmacies, we lowered the EPS forecast for 20222023 to 1.81/2.12 yuan (14.2% / 18.5% lower than the previous forecast respectively), increased the EPS forecast for 2024 to 2.47 yuan, and the current share price corresponding to PE is 13 / 11 / 10 times. Maintain the “buy” rating.
Risk warning: the epidemic situation repeatedly exceeded expectations; The operation outside the province is lower than expected; The intensity of centralized purchase of pharmacies exceeded expectations.
