\u3000\u3 Shengda Resources Co.Ltd(000603) 896 Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) )
Revenue and profit increased steadily, profitability improved significantly, and the “buy” rating was maintained
On March 31, 2022, the company released its 2021 annual report: in 2021, the company achieved an operating revenue of 767 million yuan, a year-on-year increase of 20.61%; The net profit attributable to the parent company was 201 million yuan, a year-on-year increase of 32.37%; The net profit attributable to the parent company after deducting non profits was 199 million yuan, with a year-on-year increase of 45.19%; The net cash flow from operating activities was 297 million yuan, a year-on-year increase of 15.74%. The growth rate of the company’s revenue and profit is in line with our previous expectations. The company’s products have clinical value and there is a large growth space to expand the market outside the province in the future. We maintain the same in 20222023 and add the profit forecast for 2024. It is estimated that the net profit attributable to the parent company in 20222024 will be 264 million yuan, 345 million yuan and 448 million yuan, corresponding to EPS of 1.73, 2.26 and 2.94 yuan / share respectively, and the current share price corresponding to PE of 34.3, 26.3 and 20.2 times respectively, maintaining the “buy” rating.
Internet retail complements traditional channels, and the reform of distribution channels has achieved initial results
In terms of sales areas, the company achieved a revenue of 482 million yuan (+ 19.1%) and a gross profit margin of 84.55% (- 0.7pct) in Zhejiang Province in 2021; Outside Zhejiang Province, the revenue was 92 million yuan (+ 16.31%), and the gross profit margin was 84.92% (+ 1.23 PCT); Internet business achieved a revenue of 185 million yuan (+ 27.33%) and a gross profit margin of 85.05% (+ 0.76pct). Internet sales has gradually become an important supplement to traditional sales channels. In terms of sales mode, in terms of direct sales mode, the company achieved a revenue of 343 million yuan (+ 13.67%) in 2021. In terms of distribution mode, in 2021, the company achieved revenue of 416 million yuan (+ 27.13%), of which buyout distribution achieved revenue of 270 million yuan (+ 36.54%), and the sales of dealers outside the province belong to buyout distribution. The smooth promotion of dealer mode outside the province has driven the rapid growth of revenue.
The products have the core advantages of seed source, cultivation and processing
The company’s products have the core advantages of seed source, cultivation and processing, which lays a good foundation for the national promotion of products. In terms of provenance, the company independently selected nine high-quality provenances with independent intellectual property rights, with high content of breeding active ingredients, which cast a moat for the company. In terms of cultivation, the company ensures the high quality of medicinal materials by imitating wild organic cultivation, and uses Internet of things technology to trace the whole process of planting. In terms of processing, the supersonic airflow wall breaking technology independently developed by the company significantly improves the product safety, and the original wall removal purification technology improves the content of active ingredients by more than 8 times, with a long patent protection period.
Risk tips: the promotion outside the province is less than expected, and the implementation of policies in the traditional Chinese medicine sector is less than expected
