\u3000\u3 Shengda Resources Co.Ltd(000603) 883 Lbx Pharmacy Chain Joint Stock Company(603883) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022.
Covid-19 epidemic impact + increased number of new stores, dragging down the performance in 2021. In 2021, the company achieved an operating revenue of 15.696 billion yuan, a year-on-year increase of + 12.38%; The net profit attributable to the parent company was 669 million yuan, a year-on-year increase of + 7.75%; Deduct the net profit not attributable to the parent company of 572 million yuan, a year-on-year increase of + 5.04%; Looking at 2021q4 alone, the company achieved an operating revenue of 4.415 billion yuan, a year-on-year increase of + 14.77%; The net profit attributable to the parent company was 137 million yuan, a year-on-year increase of + 2.14%. Under the adverse conditions of repeated outbreaks, the company’s revenue maintained steady growth, mainly due to the growth of franchise business, the year-on-year growth of old retail stores and the contribution of new stores such as new opening and acquisition. The profit growth rate is lower than the revenue growth rate, mainly due to the increase of new stores and losses during the cultivation period. In terms of business, the company’s retail business achieved a revenue of 13.791 billion yuan, a year-on-year increase of + 14.17%; Franchise distribution revenue reached 1.3 billion yuan, a year-on-year increase of + 31.40%. In terms of products, Chinese and Western patent medicines, traditional Chinese medicine and non drugs achieved revenue of RMB 12.440 billion, RMB 1.151 billion and RMB 2.105 billion respectively, with year-on-year changes of + 15.12%, + 29.13% and – 7.26%. Affected by the decrease in sales of covid-19 epidemic protection products, the company’s non drug revenue decreased year-on-year. In addition, the sales of the company’s own brand products reached 1.98 billion yuan, a year-on-year increase of + 62.10%; Online channel sales reached 700 million yuan, a year-on-year increase of + 170.00%.
The expansion speed of stores was accelerated, and the daily average floor effect decreased slightly. In terms of store expansion, by the end of 2021, the number of stores of the company was 8352, a year-on-year increase of + 27.84%. Among them, there were 6129 Direct stores, with a year-on-year increase of + 25.29%; 2223 franchise stores, up + 35.47% year-on-year. In terms of store floor efficiency, in 2021, the overall daily average floor efficiency of the company’s Direct stores was 59 yuan / m2, a year-on-year decrease of 4 yuan / m2. Among them, the average daily floor efficiency of flagship stores, large stores and small and medium-sized adult stores were 197, 96 and 46 yuan / m2 respectively, with a year-on-year change of + 20, + 6 and – 2 yuan / m2. The year-on-year improvement in floor efficiency of flagship stores and large stores was mainly affected by the company’s closure or splitting of some inefficient stores. The decline in floor efficiency of small and medium-sized adult stores was mainly due to the increase of new stores, the reduction of passenger flow in stores in epidemic areas and the obstruction of sales of cold and fever drugs.
The operation of 2022q1 is better, and the annual performance growth is expected. In 2022q1, the company achieved an operating revenue of 4.141 billion yuan, a year-on-year increase of + 13.81%; The net profit attributable to the parent company was 242 million yuan, a year-on-year increase of + 6.26%; Deduction of net profit not attributable to the parent company was 216 million yuan, a year-on-year increase of + 12.75%. On a monthly basis, from January to March 2022, the company’s revenue growth rate was 8.23%, 13.13% and 20.62% respectively, and its operation continued to improve. By the end of the first quarter of 2022, the company had 8612 stores, with a year-on-year increase of + 18.49%, an increase of 3.11% over the end of 2021. The overall daily average floor efficiency of Direct stores is 60 yuan / m2, a year-on-year decrease of 1 yuan / m2, and the decline of floor efficiency is reduced. Looking forward to 2022, with the gradual weakening of the impact of the epidemic in China and the new stores opened in the early stage entering the harvest period, the company’s performance is expected to achieve rapid growth.
Profit forecast and investment suggestions: the improvement of concentration and prescription outflow are the long-term growth logic of retail pharmacies. As the leader of China’s retail pharmacies, the company is expected to fully benefit. From 2022 to 2024, the company is expected to realize a net profit attributable to the parent company of RMB 850 / 1021 / 1159 million, EPS of RMB 1.89/2.28/2.58 respectively, and the corresponding PE is 17.02/14.16/12.48 times respectively. Considering: (1) in the past five years, the compound growth rate of the company’s revenue and profit is 20.83% and 17.64% respectively, and the average value of PE (TTM) is 41.28 times; (2) Affected by covid-19 epidemic and the increase of new stores, the growth rate of the company’s performance slowed down in 2021. However, with the weakening impact of covid-19 epidemic, the newly opened stores are gradually profitable. In the next three years, the company’s performance is expected to achieve a compound growth of 15% – 20%; Give the company 25-30 times PE in 2022, and the corresponding target price is 47.25-56.70 yuan / share, maintaining the company’s “buy” rating.
Risk warning: covid-19 epidemic risk; Store expansion speed is lower than expected risk; The risk of intensified industry competition; Impact risk of pharmaceutical e-commerce; Industry policy risk, etc.
