Yixintang Pharmaceutical (SZ:002727) HTSC·2025-04-29 04:20Investment Rating - The report maintains a "Buy" rating for the company with a target price of 17.45 RMB [8][9]. Core Views - The company's revenue and net profit for 2024 are projected to be 1.8 billion and 114 million RMB, respectively, reflecting a year-on-year growth of 3.6% in revenue but a significant decline of 79.2% in net profit due to high base effects from the previous year and increased impairment provisions [1]. - In Q1 2025, the company experienced a revenue decline of 6.5% year-on-year, with net profit down by 33.8%, attributed to intensified industry competition and rising sales expense ratios [1]. - The company is expected to improve its store operational quality, which may lead to better performance in the future [1]. Revenue and Profitability - Retail business revenue for 2024 is expected to grow steadily to 13.374 billion RMB, with a 3.1% year-on-year increase, driven by a 2.5% increase in pharmaceutical retail sales [2]. - The company has streamlined its store count in Q1 2025, resulting in a total of 11,451 stores, a decrease of 47 stores compared to the end of 2024 [2]. - The new retail business saw a significant growth of 47.6% year-on-year, with total sales reaching 1.293 billion RMB in 2024 [3]. Cost Structure and Margins - The sales expense ratio increased to 23.98% in Q1 2025, reflecting a rise in sales investments, while the gross margin improved slightly to 31.84% [4]. - The company’s gross margin for 2024 was reported at 31.79%, showing a year-on-year decline of 1.21% [4]. Earnings Forecast and Valuation - The forecast for net profit attributable to the parent company for 2025-2027 is adjusted to 600 million, 670 million, and 750 million RMB, respectively, with a significant increase of 426.55% in 2025 [5]. - The report predicts a PE ratio of 17x for 2025, aligning with the average of comparable companies, and sets a target price of 17.45 RMB based on this valuation [5][16].