\u3000\u3 Shengda Resources Co.Ltd(000603) 233 Dashenlin Pharmaceutical Group Co.Ltd(603233) )
Event:
On April 28, 2022, the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved an operating revenue of 16.759 billion yuan, a year-on-year increase of 14.92%; The net profit attributable to the parent company was 791 million yuan, a year-on-year decrease of 25.51%; Net profit deducted from non parent company was 718 million yuan, a year-on-year decrease of 29.77%. In the first quarter of 2022, the company realized an operating revenue of 4.677 billion yuan, a year-on-year increase of 15.22%; The net profit attributable to the parent company was 384 million yuan, a year-on-year increase of 12.82%; The net profit deducted from non parent company was 396 million yuan, with a year-on-year increase of 16.93%.
Comments:
In 2021, the operating revenue maintained steady growth and the profit side was under pressure
In 2021, the company’s operating revenue maintained a steady growth, of which the retail business realized an operating revenue of 15.285 billion yuan, a year-on-year increase of 10.99%; The wholesale business achieved an operating revenue of 1.007 billion yuan, a significant increase of 105.29% year-on-year, mainly due to the increment brought by the company’s expansion of franchise business. The profit side of the company began to decline since Q2 in 2021, and the net profit attributable to the parent company in 2021q4 lost 27 million yuan, a year-on-year decrease of 113.89%, mainly due to the impact of interest amortization under the new leasing standards, amortization of equity incentive expenses and amortization of interest on convertible bonds. The fluctuation of income structure dragged down the gross profit margin, which rebounded in 2022q1. In 2021, the company’s gross profit margin was 38.15%, a slight decrease of 0.32% year-on-year. We believe that it is mainly due to the fluctuation of the company’s product structure and the decline of non drug income with high gross profit margin. In terms of categories, the company’s Chinese and Western patent medicines achieved an operating revenue of 11.353 billion yuan in 2021, a year-on-year increase of 25.05%; The operating revenue of Chinese ginseng and medicinal materials was 2.461 billion yuan, a year-on-year increase of 13.40%; The operating income of non drugs was 2.477 billion yuan, a year-on-year decrease of 17.79%. In 2022q1, the gross profit margin of the company gradually rebounded to 41.54%, with a year-on-year increase of 3.39%, mainly due to the increase of gross profit margin of various varieties.
Store expansion was accelerated and balanced development was achieved in all regions
The company continued to focus on regional development strategy, deeply cultivated in South China, actively arranged expansion outside the province, and achieved balanced development in all regions. In 2021, the company had a net increase of 2173 stores. By the end of 2021, a total of 8139 stores (including 935 franchise stores) had been opened, covering 15 provinces such as Guangdong and Guangxi. Among them, the sales in South China market increased by 6.93%, the sales in Central China market increased by 54.93%, the sales in East China market increased by 20.85%, and the sales in Northeast, north, northwest and southwest markets increased by 96.67%, realizing the balanced development of multiple regions; In 2022q1, 276 stores were added.
Profit forecast and rating
Affected by the epidemic, the company’s performance is under short-term pressure, and gradually recovers in 2022q1. According to the company’s annual report in 2021 and the first quarterly report in 2022, and taking into account the impact of the epidemic, the net profit forecast from 2022 to 2023 is reduced from RMB 1.319/1.65 billion to RMB 968/1.196 billion, and the net profit forecast in 2024 is RMB 1.485 billion, maintaining the “buy” rating.
