\u3000\u3 China Vanke Co.Ltd(000002) 727 Yixintang Pharmaceutical Group Co.Ltd(002727) )
Event: on the evening of April 29, the company released the first quarterly report of 2022. During the reporting period, the company achieved a revenue of 3.995 billion yuan (+ 16.53%), a net profit attributable to the parent company of 179 million yuan (- 31.17%), and a net profit deducting non attributable to the parent company of 164 million yuan (- 34.81%).
The revenue side grew rapidly, and the repeated outbreaks in key business areas led to pressure on the profit side. During the reporting period, the revenue side of the company still maintained rapid growth, and the profit side decreased by 31% year-on-year, mainly due to the repeated epidemic in the company’s key business areas and strict local control policies, which affected the passenger flow of stores and the sales of some categories. Specifically, during the reporting period, 500 stores of the company were temporarily closed due to epidemic prevention and control, and more than 1000 stores were restricted due to the flow of people and business varieties in border cities. Some stores failed to resume business since August 2021, 630 employees were isolated, and 2146 stores involved in the indefinite removal of “four anti” drugs from shelves. As a result, the payment and collection of commercial insurance were hindered due to the epidemic in Shanghai, Impact on the company’s operating cash flow. During the reporting period, the company achieved a gross profit margin of 33.76% (- 3.25pct), the rate of sales / management / financial expenses changed by + 0.49pct / – 0.23pct / + 0.04pct respectively, and the net profit margin was 4.38% (- 3.2pct).
Continue to promote the integration of county and township stores. By the first quarter of 2022, the company had 8809 Direct stores, with a net increase of 249 stores (332 in the same period last year), including 372 newly opened stores, 5 closed stores and 35 relocated stores. The newly opened stores are mainly concentrated in Yunnan, Sichuan and Chongqing, Guangxi, Shanxi, Hainan and Guizhou, and continue to consolidate regional advantages. The company adheres to the layout strategy of high-density online stores in few regions. It has three-dimensional and in-depth layout at the provincial capital level, prefecture level, county level and township level. There are more than 1600 market stores at the provincial level, prefecture level, county level and township level, of which the number of township level Direct stores accounts for 18.87%, forming a unique integrated development pattern of cities, counties and townships in the industry. The logic behind it is that the store group effect can not only increase the synergy between stores, but also form the regional brand competitiveness. The small regional high-density layout has certain advantages in many aspects, such as brand efficiency, logistics distribution, medication habits, talent reserve and so on.
Adhere to the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration strategy, accelerate the layout of o2o business in existing stores and outlets, and continue to expand new business types. The company adheres to the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration strategy, continues to promote the 020 business layout of existing stores, and focuses on promoting the sales scale of home o2o self-supporting business. As of December 31, 2021, the number of o2o business stores has reached 8291, and the coverage rate has reached 96.86% of the total number of stores. O2o business accounts for 80.28% of the overall e-commerce business sales (the total e-commerce sales is RMB 380 million). The company has determined 020 business as the core business operation of e-commerce, and the business process has been continuously optimized. In addition, the lottery business and cosmetic business have developed rapidly, and the number of cosmetic stores in Yunnan Province has reached 300.
Investment suggestion: we expect the net profit from 2022 to 2024 to be RMB 1.025/13.04/1.581 billion respectively, corresponding to 12 times, 9 times and 8 times PE of the current stock price respectively. The company’s operating efficiency has been improved, its regional advantages have been continuously consolidated, and its performance growth has been stable. It continues to give a “buy” rating.
Risk warning: competition intensifies risk; Integration is less than expected risk; Policy risk.
