JZJ(605266) 国泰君安·2024-11-04 02:45Investment Rating - The report maintains a "Buy" rating for the company [2][5]. Core Views - The company's revenue growth has slowed due to a challenging consumption and policy environment, leading to significant pressure on profits. However, a recovery is expected in 2025 as the company adjusts its product categories and controls costs [2][3]. Financial Summary - For the first three quarters of 2024, the company achieved revenue of 6.735 billion yuan, a year-on-year increase of 3.6%, while net profit attributable to shareholders was 101 million yuan, down 63.8%. In Q3 2024, revenue was 2.25 billion yuan, up 4.08%, with net profit of 38 million yuan, down 68.46% [3][4]. - The company has adjusted its earnings per share (EPS) forecasts for 2024-2026 to 1.14, 1.70, and 1.98 yuan, respectively, down from previous estimates of 2.92, 3.54, and 4.22 yuan [3]. - The target price has been revised down to 28.90 yuan, reflecting a price-to-earnings (PE) ratio of 17 times for 2025 [3][5]. Revenue and Profitability - Revenue growth has been impacted by several factors, including a decline in medical insurance settlement income, high proportions of new stores with lower output, and a challenging consumption environment affecting traditional Chinese medicine and health food products [3]. - The company has seen an increase in non-drug revenue, primarily due to the introduction of high-margin skincare products [3]. Store Operations - As of Q3 2024, the total number of stores reached 5,501, with 75 new openings and 18 closures. The company is focusing on improving store operational quality amid a competitive market [3]. Cost Management - The company is experiencing increased expense ratios due to fixed costs associated with store operations. In Q3 2024, the sales, management, and financial expense ratios increased year-on-year [3]. - The company plans to enhance its own brand product development and control costs to mitigate the decline in gross margins [3]. Future Outlook - The company is expected to benefit from improvements in the consumption and policy environment, as well as the further clearing out of small pharmacies, leading to a potential recovery in performance in 2025 [3].