\u3000\u3 Shengda Resources Co.Ltd(000603) 883 Lbx Pharmacy Chain Joint Stock Company(603883) )
Event: on the evening of April 28, 2022, the company released its annual report for 2021. During the reporting period, the company realized a revenue of 15.696 billion yuan (+ 12.38%) and a net profit attributable to the parent company of 669 million yuan (+ 7.75%). Among them, Q4 realized a revenue of 4.415 billion yuan (+ 14.77%), and a net profit attributable to the parent company of 137 million yuan (2.14%).
Meanwhile, the company released the first quarterly report of 2022. During the reporting period, the company realized a revenue of 4.441 billion yuan (+ 13.81%) and a net profit attributable to the parent company of 242 million yuan (+ 6.26%).
The revenue side grew steadily. Since January, the company’s operation has gradually improved. The impact of the epidemic and the rise of interest expenses affect the performance of the profit side. Both 2021q4 and 2022q1 companies achieved double-digit growth in revenue and performed steadily. From January to March 2022, the company’s revenue increased by 8.23%, 13.13% and 20.62% year-on-year respectively. The revenue growth rate improved month by month and the operating condition was significantly better. In 2021 and 2022q1, the growth rate of the company’s profit side was lower than that of the revenue side, which was mainly due to the repeated impact of the epidemic on the operation of some regions of the company and the increase in financial expenses caused by the new accounting standards. If the impact of accounting standards is excluded, the company’s net profit in 2021 increased by 10.1% year-on-year. Specifically, in 2021, the company realized gross profit rate of 32.13% (+ 0.07pct), sales / management / financial expense rate of + 0.5pct / – 0.1pct / + 0.73pct respectively, and realized net profit rate of 5.01% (- 0.46pct). In 2022q1, the company achieved a gross profit margin of 34.32% (+ 0.82pct), and the sales / management / financial expense rate changed by + 0.53pct / + 0.66pct / – 0.29pct respectively, realizing a net profit margin of 6.54% (- 0.52pct).
By product, Chinese and Western patent medicines and traditional Chinese medicine grew steadily. In 2021, the company realized revenue of 12.44 billion yuan (+ 15.12%), gross profit margin of 29.67% (- 0.09%), revenue of 1.151 billion yuan (+ 29.18%), gross profit margin of 50.08% (+ 0.13%), revenue of 2.105 billion yuan (- 7.26%) and gross profit margin of 36.68% (+ 0.9%) from non drugs. In 2022q1, the company realized revenue of 3.323 billion yuan (+ 15.17%), gross profit margin of 31.9% (+ 1.7%), revenue of 246 million yuan (+ 2.86%), gross profit margin of 52.73% (+ 0.3%), revenue of 571 million yuan (+ 11.32%) and gross profit margin of 40.42% (- 2.77%) for non drugs.
The “four carriages” continued to make efforts, the stores expanded rapidly, and the market strategy of deep cultivation and sinking achieved initial results. By the first quarter of 2022, the company had 8612 stores (including 6242 Direct stores and 2370 franchise stores). In Q1 of 2022, the company had a net increase of 156 Direct stores, including 126 self built stores, 102 purchased stores and 43 closed stores. In 2021, Q4 company added 169 franchise stores, including 323 new franchise stores, 154 closed stores, and 74 Direct stores, including 128 self built stores and 54 closed stores. In addition, the company’s deep cultivation and sinking market strategy has achieved initial results, and the number of stores in prefecture level cities and below accounts for 67%.
Digital management to improve business efficiency. The company uses digital tools of supply chain to obtain industry-leading commodity management efficiency and inventory turnover rate. The number of inventory turnover days in 2021 is 84 days.
In addition, the company uses the data system to continuously improve its management level in optimizing commodity categories, building healthy consumption scenarios, and improving the supply chain system. The company continued to optimize the commodity SKU and increase the proportion of unified purchase. By the end of the reporting period, the proportion of unified purchase accounted for 62.7%, with a year-on-year increase of 3.5%. Enable fine management of commodity display through big data to improve inventory efficiency. In 2021, the company achieved breakthrough development of its own brands, with sales reaching 1.98 billion yuan, an increase of 62.1% year-on-year. The number of its own brands exceeded 600, accounting for more than 17%, an increase of 5.8 PCT year-on-year.
Investment suggestion: we estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 780 / 993 / 1239 million respectively, and the corresponding PE will be 17 / 13 / 11 times respectively. The company is the leader of chain drugstores in the country. It has always established its main brand, continued to improve its Ping efficiency, continuously improved its operating efficiency, increased chronic disease management services, enhanced customer stickiness and improved its competitive advantage. Continue to give “recommended” rating.
Risk warning: competition intensifies risk; Integration is less than expected risk; Policy risk.
