\u3000\u3 Shengda Resources Co.Ltd(000603) 233 Dashenlin Pharmaceutical Group Co.Ltd(603233) )
Event: on the evening of April 27, 2022, the company released its annual report for 2021. During the reporting period, the company realized a revenue of 16.759 billion yuan (+ 14.92%), and a net profit attributable to the parent company of 791 million yuan (- 25.51%). The net income was RMB 11.24 billion (+ 4.74 billion), of which the net income was RMB 11.24 billion (- 7.74 billion).
Meanwhile, the company released the first quarterly report of 2022. During the reporting period, the company realized a revenue of 4.677 billion yuan (+ 15.22%), and a net profit attributable to the parent company of 384 million yuan (+ 12.82%).
The epidemic, equity incentives and interest expenses affected the performance of 21q4, the performance of 22q1 achieved steady growth, and the gross profit margin increased year-on-year. In 2021, the company’s annual revenue increased by 14.92% year-on-year. The revenue side met expectations, and the net profit attributable to the parent decreased by 25.51% year-on-year. The decline in the profit side was mainly due to the repeated impact of the epidemic in key regions of South China on the revenue growth in 2021q4, as well as the increase of equity incentive expenses, interest expenses of convertible bonds, changes in new leasing standards and other expenses. In 2021, the company achieved a gross profit margin of 38.2%, a year-on-year decrease of 0.32pct, and a net profit attributable to the parent company of 4.8%, a year-on-year decrease of 2.63pct. In 2022q1, the company achieved a gross profit margin of 41.5%, a year-on-year increase of 2.16pct and a net profit margin of 8.2%, a year-on-year decrease of 0.37pct.
In terms of products, Chinese and Western patent medicines and Chinese ginseng medicinal materials grew steadily. In 2021, the company realized revenue of 11.353 billion yuan (+ 25.05%), and the growth rate was mainly due to the growth of over-the-counter drug sales, with gross profit rate of 32.58% (+ 0.03%), revenue of 2.461 billion yuan (+ 13.4%), gross profit rate of 42.69% (+ 4.47%), revenue of 2.477 billion yuan (- 17.79%) and gross profit rate of 47.77% (- 2.26%). In 2022q1, the company realized revenue of 3.319 billion yuan (+ 20.72%), and the growth rate was mainly due to the growth of over-the-counter drug sales, with gross profit rate of 32.58% (+ 0.03%), revenue of 572 million yuan (- 2.5%), gross profit rate of 43.02% (+ 3.76%), and revenue of 617 million yuan (+ 0.33%) and gross profit rate of 53% (- 1.8%).
Stores continued to expand, and “self construction + franchise” consolidated the regional advantages of South China. By the first quarter of 2022, the company had 8469 stores (including 1058 franchise stores), and 276 new stores were added in Q1 of 2022, including 88 new stores, 102 acquired stores, 123 franchise stores and 37 closed stores. In 2021, Q4 company added 681 stores, including 74 new stores, 332 acquired stores, 197 franchised stores and 20 closed stores. In terms of regions, the company continues to consolidate its regional advantages in Guangdong and Guangxi mainly through “self construction + franchise”, and the company mainly expands its stores in Central China by means of M & A.
The new retail business has developed rapidly, enabling physical stores to improve floor efficiency and human efficiency. During the reporting period, the company continued to develop new retail business. 7240 stores across the country covered 020 businesses, and the store coverage rate reached 89%. New retail revenue increased by 87% year-on-year. The company integrates the diversified development of new retail through the existing o2o, B2C and third-party platform business, empowers the supply chain system of new retail, reduces costs and improves efficiency for store operation, provides customers with more comprehensive health services, and empowers physical stores to improve floor efficiency and human efficiency.
Investment suggestion: we estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.012/12.691567 billion respectively, and the corresponding PE will be 19 / 15 / 12 times respectively. As a chain leader in South China, the company actively distributes markets outside the province, has outstanding fine management ability, and continues to give a “recommended” rating.
Risk warning: competition intensifies risk; Integration is less than expected risk; Policy risk.
