\u3000\u3 Shengda Resources Co.Ltd(000603) 883 Lbx Pharmacy Chain Joint Stock Company(603883) )
Key investment points
Performance: the revenue of 2022q1 was 4.141 billion yuan, with a year-on-year increase of 13.81%
On April 28, 2022, Lbx Pharmacy Chain Joint Stock Company(603883) released the annual report of 2021 and the first quarterly report of 2022. The revenue in 2021 was 15.696 billion yuan, a year-on-year increase of 12.38%; The net profit attributable to the parent company was 669 million yuan, with a year-on-year increase of 10.1% excluding the impact of the change of leasing standards. The total revenue of 2022q1 was 4.141 billion yuan, with a year-on-year increase of 13.81%, of which the operating revenue from January to March increased by 8.23%, 13.13% and 20.62% respectively; The net profit attributable to the parent company was 242 million yuan, a year-on-year increase of 6.26%.
It gradually recovered after the epidemic, and the annual income growth can be expected
The impact of the epidemic in 2021 is significant, and there is a recovery trend in 2022q1. It is optimistic that the annual income growth will accelerate. In 2021, the chain drugstore sector was greatly affected by the epidemic. As the leading drugstore in many provinces, the company was particularly affected by the epidemic. In 2021, the revenue increased by 12.38%. Excluding the impact of the change of leasing standards, the net profit attributable to the parent increased by 10.1% year-on-year. In 2022q1, we can see that after the impact of the epidemic, the company’s operating revenue from January to March increased by 8.23%, 13.13% and 20.62% respectively year-on-year, and the revenue growth showed a gradual recovery trend. We believe that with the reduction of China’s city closure and the company’s hedging adjustment to actively respond to the epidemic, the company’s annual revenue growth can still be expected.
Store growth accelerated, boosting the company’s scale growth
In 2021, 2163 new stores were added, the new stores continued to accelerate, and the scale growth can be expected. We believe that the improvement of concentration is still the core trend of chain drugstores, and the leaders of major drugstores are actively layout to accelerate the expansion of stores. From 2019 to 2021, Lbx Pharmacy Chain Joint Stock Company(603883) respectively added 1264, 1405 and 2163 stores, and the number of stores continued to grow rapidly. We expect that from 2022 to 2023, thanks to the company’s stable M & A and franchise expansion, the number of stores of the company will still maintain an annual growth of more than 2000 (including direct sales and franchise), driving the revenue growth of the company by more than 20%.
Profitability: the profit margin may be relatively stable
Cost reduction and efficiency increase are started, and the profit margin is expected to maintain a relatively stable level. The company’s gross profit rate is expected to decline by about 5% in the short term with the deepening of the adjustment of the company’s gross profit rate, and the net profit rate is expected to remain at the level of about 32% through the deepening of the management policy.
Profit forecast and valuation
Based on the above assumptions, we believe that the operating revenue of the company from 2022 to 2024 is RMB 189.83/23.207/27.753 billion respectively, with a year-on-year increase of 20.94%, 22.25% and 19.59% respectively; The corresponding net profit attributable to the parent company was 7769491145 billion yuan, with a year-on-year increase of 16.00%, 22.21% and 20.69% respectively; The corresponding EPS is 1.88/2.10/2.53 yuan respectively, maintaining the “overweight” rating.
Risk tip: the risk of intensified industry competition; The risk that the store expansion is less than expected; The risk of continuing the epidemic; The risk that the price reduction of centrally purchased drugs exceeds the expectation; Risk that the scale growth of the pharmaceutical industry is less than expected
