DSL(SH:603233) China Post Securities·2025-08-29 12:36Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected stock price increase of over 20% relative to the benchmark index within the next six months [7][14]. Core Insights - The company reported a strong performance in Q2, with profits exceeding expectations due to cost reduction and efficiency improvements. The H1 2025 revenue was 13.523 billion yuan, a 1.33% increase, while the net profit attributable to shareholders was 798 million yuan, up 21.38% [3][4]. - The company is dynamically optimizing its store network and actively engaging in prescription outsourcing, with a total of 16,833 stores across 21 provinces as of June 30, 2025 [6]. - The company is expected to continue its growth trajectory, with projected revenues of 29.15 billion yuan, 32.11 billion yuan, and 35.43 billion yuan for 2025, 2026, and 2027 respectively [7]. Financial Performance - For H1 2025, the gross margin was 34.86%, with a net profit margin of 5.90%. The company achieved significant cost control, with a sales expense ratio of 21.52% [4]. - The retail business generated 11.005 billion yuan in revenue, while the franchise and distribution business saw an 8.26% increase in revenue to 2.136 billion yuan [5]. - The company’s operating cash flow for H1 2025 was 2.91 billion yuan, reflecting a 64.67% increase [3]. Store Network and Expansion - The company has increased its store count by 280 in H1 2025, with a focus on optimizing its network by closing 285 underperforming stores [6]. - The company has established a significant presence in the market with 278 DTP specialty pharmacies and over 10,000 stores qualified for personal account medical insurance [6]. Profit Forecast and Valuation - The forecast for net profit attributable to shareholders is 1.147 billion yuan for 2025, 1.320 billion yuan for 2026, and 1.522 billion yuan for 2027, with corresponding PE ratios of 17, 15, and 13 [7][10].