LBX(SH:603883) Ping An Securities·2025-08-27 03:31Investment Rating - The report maintains a "Recommendation" rating for the company [1][9]. Core Views - The company's Q2 performance shows a narrowing decline, with revenue of 5.339 billion yuan, down 1.14% year-on-year, and a net profit of 147 million yuan, down 18.86% year-on-year [5][9]. - The company is actively optimizing its store layout, with a total of 15,385 stores across 18 provinces and over 150 cities, including 9,784 direct-operated stores and 5,601 franchised stores [9]. - The company is focusing on expanding into lower-tier markets, with 77% of its stores located in cities at or below the prefecture level [9]. Financial Performance Summary - For the first half of 2025, the company reported a revenue of 10.774 billion yuan, a decrease of 1.51% year-on-year, and a net profit of 398 million yuan, down 20.86% year-on-year [5][9]. - The gross margin for H1 2025 was 33.08%, a decrease of 1.24 percentage points year-on-year, with traditional Chinese medicine showing a gross margin of 48.71%, up 2.98 percentage points [9]. - The company has adjusted its profit forecasts for 2025-2027, now expecting net profits of 740 million, 868 million, and 997 million yuan respectively [9]. Financial Projections - Revenue projections for 2025 are set at 23.14 billion yuan, with a year-on-year growth of 3.5% [7][12]. - The net profit for 2025 is projected to be 740 million yuan, reflecting a significant recovery from a previous decline of 44.1% in 2024 [7][12]. - The company’s gross margin is expected to stabilize around 33% from 2025 onwards [12].