Yifeng Pharmacy (603939) Annual Report Commentary Report: Focusing on the Effectiveness of the Strategy

Yifeng Pharmacy (603939) Annual Report Commentary Report: Focusing on the Effectiveness of the Strategy
The scale of 2018 has continued to increase. In the beginning of 2019, high-growth companies will publish their 2018 annual reports. In 2018, the company achieved revenue of 69.13 ppm, a 43-year increase of 43.79%; net profit attributable to mothers4.160,000 yuan, an increase of 32 苏州夜网论坛 in ten years.83%; net profit after deduction to mother 3.82 ppm, an increase of 23 in ten years.53%.In 2018, the company’s net cash flow from operating activities was 5.110,000 yuan, an increase of 61 in ten years.01%.Basic benefits 1.144 yuan / share, increase 32 later.41%.By quarter, the company achieved revenue in the fourth quarter of 201822.47 million, an increase of 61 every year.85%, an increase of 34 in one year.39% in the fourth quarter.In 2018, with the long-term growth of old stores and the continued contribution of newly opened stores and M & A stores, the company’s scale has continued to increase and usher in rapid development.The company also released the 2019 first quarter report.In the first quarter of 2019, the company achieved revenue of 24.69 ppm, an increase of 66 per year.67%; net profit attributable to mothers1.470,000 yuan, an increase of 45 years.77%, net profit after deduction to non-returned mother1.420,000 yuan, an increase of 47 in ten years.98%.In 2019, the company ushered in a “big start”. In the first quarter, the operating scale and profit achieved high growth, exceeding our expectations.  Stores expanded steadily, the proportion of medical insurance stores continued to increase. In 2018, the total number of company stores reached 3,611 (including 169 franchise stores). In 2018, there were 1,552 net increase stores, of which 546 were directly operated stores, and 89 were franchised stores.959, 42 closed.Judging from the expansion of stores in 2018, the company’s mergers and acquisitions in 2018 were mainly supported by new construction, and the overall stores achieved rapid growth.By the first quarter of 2019, the total number of the company’s stores reached 3958, a net increase of 347 in the first quarter, of which 204 were acquired, 131 were newly opened, 43 joined, and 31 closed; the number of directly operated stores in the first quarter was 3746, which remains unchangedThe rapid growth.In terms of categories, in 2018, the company’s Chinese and western patent medicines achieved 47.3 billion yuan in revenue (+48.63%), gross profit margin is 35.04% (+0.56pp); Chinese medicine achieves 8.40,000 yuan income (+24.86%), gross profit margin 40.98% (-0.1pp); non-drug realization 11.4 billion revenue (+36.40%), gross margin of 47.08% (-4.29pp).In terms of different regions, Central South China and East China are still the main sources of revenue for the company, of which Central South China accounts for the proportion of revenue.37%, East China’s revenue accounted for 44.02%.East China’s revenue in 2018 remained at 40.45% growth.In the process of long-term development, the company has always implemented a regional focus development strategy. It has achieved leading market shares in Central South, East China, and Northeast China.In 2018, the company entered the North China region. The overall overall layout is in Hunan, Hubei, Guangdong, Jiangsu, and Shanghai., Zhejiang, Jiangxi, Hebei and Beijing have a total of 9 provinces / cities.In 2018, the total number of the company’s medical insurance stores reached 2,580, accounting for 74 of the company’s total number of stores.96%.The proportion of medical insurance stores in Central and South China, East China and North China was 84.79%, 61.32%, 79.45%, the proportion of medical insurance stores increased by 6.59%, the increase in the number of medical insurance stores is expected to become the company’s new growth point in the future.  The refined management effect is obvious, and the overall profitability is stable. In 2018, the company’s gross sales margin and net sales margin were 39.73%, 6.39%, a slight decline before 2017.In 2018, the company’s sales expense ratio, management expense ratio and financial expense ratio were 27.43%, 3.87%, 0.19%.On the whole, the increase in sales scale has increased the sales expense ratio, and the increase in financial expenses is mainly due to the increase in corporate loans.The company has been committed to refined management, and the management expense ratio decreased by 0 compared with 2017.28pp.  The outstanding outsourcing M & A integration capabilities of evaluation and rating companies promote the increase of business scale and market share, and the scale effect and refined internal management improve the company’s operating efficiency.The company’s old store and expansion rate are higher than our expectations. We raise the company’s profit forecast, and the net profit for 2019-2020 will be 5.47/6.74 is adjusted to 5.52/7.3.3 billion.The corresponding EPS is 1.46/1.95 yuan / share, maintaining the “overweight” rating.  Risk reminder: The new store market has a longer incubation period, market competition risks, policy risks, a company’s goodwill value is high, and there is an impairment risk.