\u3000\u3 Shengda Resources Co.Ltd(000603) 939 Yifeng Pharmacy Chain Co.Ltd(603939) )
Matters:
The company issued the 2021 annual report: the revenue was 15.326 billion yuan (+ 16.60%); The net profit attributable to the shareholders of the listed company was 888 million yuan (+ 19.42%); Deduct non net profit of 859 million yuan (+ 20.30%). In the fourth quarter and single quarter, the revenue was 4.388 billion yuan (+ 18.35%); The net profit attributable to the shareholders of the listed company was 192 million yuan (+ 12.46%); Deduct non net profit of 177 million yuan (+ 5.24%). Distribution plan of the company: distribute cash dividend of RMB 3.00 (including tax) to all shareholders for every 10 shares. At the same time, the company released the first quarterly report of 2022: the revenue was 4.148 billion yuan (+ 14.29%); The net profit attributable to the shareholders of the listed company was 272 million yuan (+ 12.82%); Deduct non net profit of RMB 266 million (+ 14.12%).
Ping An View:
The steady expansion of stores and the growth of the company’s performance driven by endogenous and extension: in 2021, the company had a net increase of 1818 stores, including 1197 self built stores, 425 M & A stores, 297 new franchise stores and 101 closed stores. By the end of the reporting period, the company had a total of 7809 stores (including 932 franchise stores). In terms of sub regions, the company aims to “consolidate central and southern China and East China and expand the national market”. In 2021, the number of stores in central and southern China will increase by 966, the number of stores in East China will increase by 738 and the number of stores in North China will increase by 114. In the first quarter of 2022, the company added 454 stores, with a net increase of 416, including 232 self built stores, 158 purchased stores, 64 new franchise stores and 38 closed stores. By the end of the reporting period, the company had 8225 stores (including 996 franchise stores). In 2022, the company accelerated the pace of mergers and acquisitions. In the first quarter, there were 9 mergers and acquisitions and delivered 7 projects, and successively acquired chain pharmacies such as Jiangxi baihuikang pharmacy and Hunan Zhongxin pharmacy. The growth of the company’s performance mainly comes from the year-on-year endogenous growth of old stores, the construction of new stores and the increase of M & a scale in the same industry.
The proportion of the company’s medical insurance stores has increased, and its ability to undertake outflow prescriptions has been strengthened: as of December 31, 2021, the company has 6877 direct chain stores, and 5561 pharmacies have obtained the qualification of various “designated retail pharmacies of medical insurance”, accounting for 80.86% of the total number of Direct stores of the company, which is basically the same as that of the same period of last year. The company has more than 500 hospital side stores and 237 DTP specialty pharmacies have been built in China, including 130 dual channel medical insurance stores, more than 1000 overall medical insurance pharmacies for chronic diseases, 200 drugs negotiated under national medical insurance agreements and nearly 65 varieties of hospital prescriptions. The company’s ability to undertake processing has been further strengthened.
Strengthen the construction of online platforms, and both o2o and B2C businesses are growing rapidly: the company continues to promote the construction of a new ecological pharmaceutical retail system based on membership, big data, Internet medicine, health management, etc. by the end of 2021, o2o has more than 6600 online direct stores and more than 600 24-hour distribution stores, covering all major offline cities of the company, and can quickly cover the stores of M & A projects and franchise projects, picking timeliness Distribution timeliness, order fulfillment rate and human efficiency are at the leading level in the industry. B2C and o2o businesses achieved sales revenue of 1.128 billion yuan in the whole year, with a year-on-year increase of 64%. The company’s e-commerce operation is getting better and better, adding impetus to the long-term growth of performance.
Maintain a “recommended” rating. The company’s stores are located in the core areas of central and South China and economically developed areas in East China, with geographical advantages. Under the vigorous expansion, the revenue and profit have maintained rapid growth for many years. At present, there is still a large expansion space in the advantageous areas where the company is located. The intensive layout stage will bring better scale effect, and the profitability is expected to be enhanced. Considering the slowdown of the company’s expansion in the second half of last year, we lowered the profit forecast for 20222023 (the original forecast net profit for 20222023 was 1.315 billion yuan and 1.673 billion yuan), and added the profit forecast for 2024. From 2022 to 2024, the company’s net profit was 1.158 billion yuan, 1.443 billion yuan and 1.737 billion yuan, maintaining the “recommended” rating.
Risk tips: 1) the integration of extension acquisition targets does not meet expectations. The newly acquired stores need to go through the stages of personnel integration and commodity adjustment. With the increasing number of M & A projects, the risk that the operation of the M & a target does not meet the expectations increases. 2) Policy risk. With the deepening of the new medical reform, the industry supervision is more strict. If the company cannot make corresponding adjustments according to the policy changes in time, it may bring business risks. 3) The risk of rapid expansion affecting short-term performance. The rapid expansion of the company needs to invest a lot of money, and the profitability of new stores is not as good as that of old stores in the short term. Therefore, the increase of relevant expenses may be faster than that of revenue, and the company’s profits may be frustrated in the short term.
