Yixintang Pharmaceutical (SZ:002727) Guotai Junan Securities·2024-09-01 12:49Investment Rating - Maintains an "Overweight" rating [2] - Target price adjusted to 15.24 yuan, down from the previous forecast of 26.10 yuan [2] - Current price stands at 12.14 yuan [2] Core Views - Retail revenue growth slowed, with gross margin declining due to proactive price adjustments [4] - Accelerated store openings impacted short-term profits, but future net profit margins are expected to improve as gross margins stabilize and new stores become profitable [4] - 2024H1 revenue reached 9.305 billion yuan (+7.26%), with net profit attributable to shareholders at 282 million yuan (-44.13%) [5] - Q2 2024 revenue was 4.206 billion yuan (-0.81%), with net profit attributable to shareholders at 52.05 million yuan (-80.29%) [5] - EPS forecasts for 2024-2026 revised to 1.28/1.57/1.86 yuan, down from previous estimates of 1.69/1.97/2.28 yuan [5] Business Performance - Retail and wholesale revenue growth in 2024H1 was +4.0% and +20.82%, respectively [5] - By product category, growth rates were +8.29% for Chinese and Western medicines, -13.41% for medical devices, and +34.42% for traditional Chinese medicines [5] - Diversified business, including personal care, cosmetics, food, and infant formula, generated 796 million yuan in revenue (+19.8%) [5] Gross Margin and Expenses - Gross margin in 2024H1 was 31.44%, down 2.12 percentage points, with retail and wholesale margins declining by 1.28 and 1.00 percentage points, respectively [5] - Q2 2024 saw a sequential improvement in gross margin by 2.38 percentage points [5] - Sales, management, and financial expense ratios increased by +0.50, -0.03, and +0.23 percentage points, respectively, due to higher wage costs [5] Regional Expansion - Total number of stores reached 11,291 by 2024H1, with 1,317 new stores opened in the first half, representing an 18% growth rate [5] - Stores outside the home province now account for 50.9% of the total, with key focus areas being Sichuan, Chongqing, Guangxi, Hainan, and Henan [5] - Revenue growth in the southwest region was 4.9%, while other regions grew by 18% [5] Financial Summary - 2024E revenue forecast at 19.005 billion yuan (+9.3%), with net profit attributable to shareholders at 760 million yuan (+38.3%) [6] - EPS for 2024E is projected at 1.28 yuan, with ROE at 9.3% [6] - P/E ratio for 2024E is 9.52, and P/B ratio is 0.88 [6] Valuation and Market Performance - 52-week stock price range: 11.40-26.22 yuan [6] - Total market capitalization: 7.236 billion yuan [6] - Stock price performance: -9% over 1 month, -42% over 3 months, and -46% over 12 months [9]