\u3000\u3 Shengda Resources Co.Ltd(000603) 233 Dashenlin Pharmaceutical Group Co.Ltd(603233) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the operating revenue will reach 16.76 billion yuan (+ 14.9%); The net profit attributable to the parent company is 790 million yuan (- 25.5%); The net profit attributable to the parent company after deducting non profits was 720 million yuan (- 29.8%). In the first quarter of 2022, the operating revenue was 4.68 billion yuan (+ 15.2%); Net profit attributable to parent company: RMB 380 million (+ 12.8%); After deducting RMB 1.69 billion, the net profit belongs to the non parent company (+ 1.64 billion).
Affected by the epidemic, revenue growth slowed down and profits were under pressure in the short term. In 2021, the revenue increased by 14.9% year-on-year; Net profit attributable to parent decreased by 21.4% year-on-year. The main reason is that Guangdong has been greatly affected by the epidemic and the government has tightened control, resulting in restrictions on the passenger flow and logistics transportation of some drugs and stores. With the gradual improvement of the epidemic situation, the performance recovery trend in the first quarter was obvious. In the post epidemic era, it is expected that 2022 will usher in a comprehensive recovery of performance.
The growth of Chinese and Western patent medicines continued to be strong. In 2021, the revenue of Chinese and Western patent medicines reached 11.35 billion, with a year-on-year increase of 25.1%, accounting for 67.7% of the total revenue; The revenue of Chinese ginseng and medicinal materials reached 2.46 billion, an increase of 13.4% year-on-year, accounting for 14.7% of the total revenue; Non drug revenue reached 2.47 billion, a year-on-year decrease of 17.8%. The growth of Chinese and Western patent medicines mainly comes from the sales growth brought by over-the-counter drugs.
“M & A + direct marketing” in South China and “deep cultivation” in the whole country. By the end of 2021, the company had 8193 stores (including 935 franchise stores). In 2021, 2271 stores were added, with a year-on-year increase of 38.4%, including 903 self built stores, 620 franchise stores, 748 M & A stores and 98 closed stores. Overall, the new stores in 2021 are still mainly in South China, with a total of 1326 new stores in South China, accounting for 58.4% of the total. In 2021, the company mainly had 32 m & A businesses in the same industry, involving 1029 stores, with a total of 748 consolidated stores, including 71 in South China, 138 in East China, 115 in Central China and 424 in Northeast, north, northwest and southwest China.
The prescription outflow business continues to be distributed. Under the industry trend of prescription outflow, the company actively expands specialized pharmacies such as hospital side stores, DTP and door-to-door specialty pharmacies, strengthens professional service capacity and prescription drug supply system, and connects prescription circulation. In 2021, there were 760 hospital side stores, with a year-on-year increase of 28%, including 133 DTP specialty pharmacies. The company has reached strategic cooperation with a number of prescription drug manufacturers, and developed 3956 new varieties in 2021, including 2005 prescription varieties and 1134 DTP varieties. The total number of SKUs of the group exceeds 100000.
Profit forecast and investment suggestions. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 953 million yuan, 1148 million yuan and 1381 million yuan respectively, and the EPS will be 1.21 yuan, 1.45 yuan and 1.75 yuan respectively, corresponding to 20 times, 17 times and 14 times of PE respectively, maintaining the “buy” rating.
Risk warning: uncertainty of epidemic situation; Store expansion is less than expected; Risk of drug price reduction.
