\u3000\u3 China Vanke Co.Ltd(000002) 727 Yixintang Pharmaceutical Group Co.Ltd(002727) )
Event: the company released the annual report of 2021. In 2021, the operating revenue reached 14.59 billion, a year-on-year increase of 15.3%; The net profit attributable to the parent company was 920 million, with a year-on-year increase of 16.7%; The net profit deducted from non parent company was RMB 900 million, with a year-on-year increase of 19.4%; The net cash flow from operating activities was 1.79 billion, a year-on-year increase of 73.5%.
Accelerate the expansion of stores, focusing on Sichuan and Chongqing. By the end of 2021, the total number of stores was 8650, with a year-on-year increase of 19%, a net increase of 1355 compared with the end of 2020, and an increase compared with the opening growth rate of 15% in 2020. The direct marketing network penetrates 10 provinces and municipalities directly under the central government. The Sichuan Chongqing market is the main market of the company, and strive to build Sichuan and Chongqing into the region with the largest sales volume of the company. Form a tripartite layout of Sichuan and Chongqing, Yunnan and Guizhou, Guangxi and Qiongzhou, echoing Shanxi, Henan and Tianjin in North China. In 2021, there were 1407 stores in Sichuan Chongqing market, with a year-on-year increase of 22%, accounting for 16.3% of the total number of stores in China. In the future, the company will adhere to the development strategy of “less regional and high-density outlets”, take “improving market share” and “building the first brand of local pharmacies” as the business objectives, and speed up the expansion of stores through standardized replication.
Continuously develop new members and strengthen member management. By the end of 2021, the number of effective members had reached 30 million, an increase of 25% year-on-year and 2 million month on month compared with Q3 in 2021. In 2021, the unit price of member customers was 95.4 yuan, a decrease of 4.3 yuan compared with that in 2020. From the perspective of member sales repurchase rate, 36% of members consumed once, an increase of 3.2 percentage points over 2020. Upgrading the inclusive nature of members’ rights and interests, promoting members’ cohesive support and comprehensively improving members’ scene experience are the embodiment of the company’s comprehensive competitiveness. In the future, the company will continue to strengthen professional service capabilities, accurately analyze customer needs and medication habits, deeply tap potential members and expand brand influence.
Differentiated business model promotes the layout of traditional Chinese medicine industry chain. The categories operated by the company include Chinese and Western patent medicines, medical devices and family planning supplies, disinfection supplies, traditional Chinese medicine and others. In 2021, the number of transactions in various categories increased by 10.8% year-on-year. In terms of category sales, the sales of Chinese and Western patent medicines increased by 18.7% year-on-year; Traditional Chinese medicine increased rapidly, with a year-on-year increase of 21.2%; Sales of other products increased by 12.1% year-on-year. The company focuses on the traditional Chinese medicine sector and establishes a complete industrial chain of seedling cultivation, preliminary processing, fine processing, wholesale, medical institution supply, retail sales and other businesses to ensure that the company provides customers with traditional Chinese medicine products with rich categories, quality assurance and convenient dosage forms. The deepening of industrial chain layout will help to reduce operating costs and expenses, fully save working capital and reasonably shorten capital. Under the favorable policies of the 14th five year plan, the traditional Chinese medicine sector is expected to have better market prospects and strong popularization.
Profit forecast and investment suggestions. It is estimated that the company will achieve revenue of RMB 16.776192.92/22.186 billion and net profit attributable to the parent company of RMB 1.095/12.721485 billion from 2022 to 2024, with corresponding PE of 13 / 11 / 10 times respectively, maintaining the “buy” rating.
Less than expected epidemic situation, increased market risk, and increased market risk.
