DSL(SH:603233) Guoxin Securities·2025-12-06 07:11Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [2] Core Insights - The company is a leading retail pharmacy chain in China, focusing on both traditional and modern medicine, with a wide coverage across 21 provinces. As of September 30, 2025, it operates 17,385 stores, including 10,356 direct-operated and 7,029 franchised stores. The company is shifting from "scale expansion" to "quality improvement" and aims to enhance its core competitiveness through digital supply chains and specialized services [3][5][13] - The retail pharmacy industry is undergoing a transformation from scale expansion to quality competition, with a market size of 929.3 billion yuan in 2023, growing by 6.5% year-on-year, although the growth rate has slowed significantly [3][46] - The company achieved a revenue of 20.068 billion yuan in the first three quarters of 2025, a year-on-year increase of 1.7%, and a net profit of 1.081 billion yuan, up 26.0% year-on-year. The third quarter alone saw a revenue of 6.546 billion yuan, growing by 2.5%, and a net profit of 283 million yuan, up 41.0% year-on-year [3][19][26] Company Overview - The company has developed into a leading retail pharmacy chain through steady internal growth and strategic acquisitions since its establishment in 1999. It has expanded its network significantly, covering major markets across China [5][13] - The ownership structure is concentrated, with the controlling shareholders being three brothers who collectively hold 55.12% of the shares, ensuring efficient decision-making [8] Industry Status - The retail pharmacy market is experiencing a decline in growth rates, with the number of retail pharmacies decreasing from 706,000 in Q3 2024 to 699,000 in Q1 2025 due to various factors including online competition and regulatory changes [46][51] - The industry is expected to see increased concentration and chain rates, with larger chains likely to gain a competitive edge over smaller pharmacies [3][46] Financial Performance - The company’s profit margins have improved, with a gross margin of 34.8% and a net margin of 5.8% in the first three quarters of 2025. The retail business achieved a gross margin of 37.7% [26][29] - The company’s revenue forecast for 2025-2027 is projected to be 27.205 billion, 30.071 billion, and 33.363 billion yuan, with corresponding net profits of 1.208 billion, 1.485 billion, and 1.798 billion yuan, indicating strong growth potential [3][113]