DSL(SH:603233)2022-04-27 16:00Financial Performance - The net profit attributable to the parent company for 2021 was CNY 791,230,980.50, with a retained earnings balance at the beginning of the year of CNY 2,421,897,777.36[3]. - The company’s operating revenue for 2021 was approximately ¥16.76 billion, representing a year-over-year increase of 14.92%[16]. - The net profit attributable to shareholders for 2021 was approximately ¥791.23 million, a decrease of 25.51% compared to the previous year[16]. - The net cash flow from operating activities for 2021 was approximately ¥1.55 billion, down 20.42% from the previous year[17]. - The total assets at the end of 2021 were approximately ¥17.34 billion, reflecting a 40.58% increase from the end of 2020[17]. - The basic earnings per share for 2021 was ¥1.00, a decline of 25.93% compared to 2020[18]. - The weighted average return on equity for 2021 was 14.61%, down 8.13 percentage points from the previous year[18]. - The company reported a net profit of approximately ¥340.55 million in Q1 2021, with a decline in Q4 resulting in a loss of approximately ¥27.10 million[20]. - Non-recurring gains for 2021 included government subsidies amounting to approximately ¥62.56 million[21]. - Net profit attributable to shareholders decreased by 25.51% to 791 million RMB, while the net profit after deducting non-recurring gains and losses was 718 million RMB, down 29.77% year-on-year[25]. Dividend and Capital Management - The company plans to distribute a cash dividend of CNY 5 per 10 shares, totaling an estimated cash dividend of CNY 395,464,873.50 (including tax)[3]. - The company intends to increase capital reserves by converting 2 shares for every 10 shares held, expecting to issue approximately 158,185,949 new shares[3]. - The company reported a retained profit available for distribution to shareholders at the end of 2021 of CNY 2,600,670,711.40[3]. - The cash dividend policy stipulates that at least 20% of the distributable profit for the year must be distributed in cash, with a minimum of 80% for mature companies without major capital expenditure plans[121]. - The company plans to increase its cash dividend payout ratio in line with its development stage and capital expenditure needs[121]. Operational Highlights - The company expanded its pharmacy chain to 8,193 stores across 15 provinces, adding 903 self-built stores, 620 franchise stores, and 748 acquired stores during the reporting period[26]. - New retail business (O2O + B2C) sales grew by 87% year-on-year, with O2O delivery services covering 7,240 stores, achieving a coverage rate of 89%[27]. - The company developed 3,956 new product varieties during the reporting period, including 2,005 prescription varieties and 1,134 DTP varieties, with total SKUs exceeding 100,000[28]. - The company’s membership base exceeded 62 million, with a continuous increase in member repurchase rates and consumption share[29]. - The company closed 98 stores during the reporting period while dynamically optimizing its store network[26]. Market and Industry Insights - The retail drug market in China reached a total sales of 1,787.5 billion CNY in 2021, growing by 8.75% compared to 2020, but slightly below the 2019 figure of 1,795.5 billion CNY[30]. - The sales of retail pharmacies amounted to 469.6 billion CNY in 2021, reflecting a year-on-year growth of 3.21%, with a two-year average growth rate of 5.02%[30]. - The top 100 retail drug enterprises accounted for 52.45% of the total sales in the physical retail market, with the top 20 and top 10 contributing 35.05% and 27.51% respectively[30]. - The retail pharmacy chain rate in China increased to 57.65% by the end of September 2021, up from 56.99% at the end of 2020[31]. - The company aims to align with the target of becoming a 50 billion CNY retail chain enterprise, as outlined in the Ministry of Commerce's guidelines for the pharmaceutical distribution industry[34]. Strategic Acquisitions and Partnerships - The company actively pursued acquisitions in key regions, successfully consolidating 748 stores into its operations[27]. - The company completed 32 investment and acquisition transactions in the reporting period, involving 1,029 stores, with 140 stores signed but not yet delivered[70]. - The company acquired 51% of the shares in Henan Province Yanhuang Pharmacy Chain Co., Ltd. for 68.34 million yuan, involving 59 stores, with the project completed in June 2021[73]. - The company plans to continue expanding its market presence through strategic acquisitions and partnerships in the pharmaceutical retail sector[70]. Governance and Compliance - The board of directors consists of 7 members, including 3 independent directors, and held 12 meetings during the reporting period, ensuring effective governance and decision-making[95]. - The company has not reported any significant differences in governance practices compared to regulatory requirements, indicating compliance with industry standards[96]. - The company strictly adheres to legal and regulatory requirements in its governance practices, ensuring transparency and accountability[96]. - The company has not faced any penalties from securities regulatory authorities in the past three years[109]. Risk Management - There were no significant risks impacting the company's operations during the reporting period[4]. - The company has not engaged in any non-operational fund occupation by controlling shareholders or related parties[4]. - The company acknowledges potential short-term profitability risks when entering new markets, particularly in regions where brand recognition and market share are still developing[92]. - Regulatory risks in the pharmaceutical industry may impact operations, prompting the company to adapt business models and ensure compliance with evolving policies[92]. Employee and Talent Development - The company has implemented a talent development strategy, training nearly 400 managers and over 1,000 specialized personnel to support rapid expansion and innovation[29]. - The company emphasizes the importance of a skilled talent pool for sustainable operations and plans to enhance its talent development and training programs[93]. - The company has a total of 38,353 employees, with 31,790 sales personnel, which constitutes the largest segment of its workforce[117]. - The employee contract signing rate was 100% as of December 31, 2021, with a workforce of 38,394 employees, of which 85.74% are female[134]. Corporate Social Responsibility - The company has been recognized as an outstanding enterprise in pandemic supply support and as a socially responsible pharmaceutical company in 2021[135]. - The company distributed over 280,000 masks and provided pandemic prevention materials valued at over 4.6 million during the reporting period[142]. - The company conducted 241 community health events and over 80,000 community medical consultations[142]. Digital Transformation and Innovation - The company is focusing on digital transformation, with a 30% increase in budget for technology upgrades and e-commerce platforms[103]. - The company aims to enhance customer engagement through loyalty programs, expecting a 20% increase in repeat purchases[103]. - The company is committed to accelerating digital transformation across various operations, including membership marketing, transaction processes, and supply chain management, to improve efficiency[89]. Internal Control and Quality Management - The company has established a comprehensive internal control system that meets the requirements of the Ministry of Finance and the China Securities Regulatory Commission[127]. - The company has implemented a performance evaluation system for senior management to ensure transparency and compliance with legal regulations[126]. - The company conducted 50 quality audits and 33 warehouse inspections during the reporting period, ensuring compliance with safety and quality standards[137].