Yixintang Pharmaceutical (002727) 华创证券·2024-11-13 04:33Investment Rating - The report maintains a "Recommended" rating for the company with a target price of 16.7 CNY, compared to the current price of 14.79 CNY [1]. Core Insights - The company's revenue for the first three quarters of 2024 was 13.59 billion CNY, with a year-on-year change of +6.1%. However, the net profit attributable to shareholders decreased by 57.4% to 290 million CNY, and the net profit after deducting non-recurring items fell by 49.4% to 340 million CNY. The revenue decline is primarily attributed to a decrease in the commercial segment [1][2]. - The company has rapidly expanded its store network, reaching a total of 11,516 stores as of Q3 2024, representing a 15.1% increase. Non-Yunnan stores account for 51.6% of the total, with significant concentrations in the Sichuan-Chongqing region [2]. - The company is actively implementing measures to improve quality and efficiency, including rent negotiations, cost control, and category optimization. A new wholly-owned subsidiary focused on digitalization has been established, aiming for a comprehensive digital model by early 2025 [2]. - Profitability is under pressure, with a gross margin of 32.4% in Q3 2024, a slight increase of 0.2 percentage points year-on-year. However, the net profit margin dropped to 0.3%, down 4.1 percentage points year-on-year, and the selling expense ratio increased by 3.8 percentage points to 27.2% [2]. Financial Summary - The total revenue for 2023 is projected at 17.38 billion CNY, with a slight decline of 0.3%. Revenue is expected to grow by 6.0% in 2024, 14.2% in 2025, and 14.3% in 2026 [3]. - The net profit attributable to shareholders is forecasted to be 549 million CNY in 2023, decreasing by 45.6%, with further declines expected in 2024 and 2025 before recovering in 2026 [3]. - Earnings per share (EPS) is projected to be 0.92 CNY in 2023, dropping to 0.68 CNY in 2024, and gradually increasing to 0.99 CNY by 2026 [3].