JZJ(SH:605266) Guotai Junan Securities·2024-03-11 16:00Investment Rating - The report initiates coverage with a "Buy" rating for the company [2][3]. Core Views - The company is expected to leverage its scale advantages, successful integration experience, and diversified business operations to implement a national dual-center strategy, further expanding its growth ceiling. The growth rate of existing stores is anticipated to stabilize and improve [2]. - The company has opened 4,711 stores as of Q3 2023, with a significant increase in the proportion of stores outside Yunnan, rising from 18% in 2014 to 36% by Q3 2023, indicating potential for further expansion [2][27]. - The report forecasts EPS for 2023-2025 to be 3.15, 3.73, and 4.44 CNY, respectively, with a target price of 60.19 CNY, corresponding to a PE of 16X for 2024 [2][3]. Summary by Sections 1. Earnings Forecast and Valuation - The company’s revenue is projected to reach 92.29 billion CNY in 2023, 112.29 billion CNY in 2024, and 136.35 billion CNY in 2025, with year-on-year growth rates of 23%, 22%, and 21% respectively [13][14]. - The net profit attributable to the parent company is expected to be 4.05 billion CNY in 2023, 4.80 billion CNY in 2024, and 5.72 billion CNY in 2025, with growth rates of 12%, 18%, and 19% respectively [13][14]. 2. Rapid Expansion of Chain Pharmacies - The company is in a phase of rapid expansion, moving from Yunnan to other provinces, with a focus on establishing a dual-center strategy in Southwest and Hebei regions [28][27]. - The acquisition of Tangren has facilitated entry into new markets, enhancing market share [27]. 3. Industry Concentration and Same-Store Growth - The concentration of the retail pharmacy industry is increasing, with the company positioned to benefit from this trend [2]. - The same-store sales growth is expected to stabilize, benefiting from the gradual recovery of household inventories and the integration of new stores [2][40]. 4. Diversification and Sustainable Growth - The company is diversifying its business model, including beauty products and online services, which are expected to attract younger customers and differentiate it from competitors [2]. - The report highlights the importance of professional membership services and chronic disease management in enhancing customer loyalty [2]. 5. Financial Metrics - The company’s revenue for 2021 was 5,235 million CNY, increasing to 7,514 million CNY in 2022, with a projected revenue of 9,229 million CNY in 2023, reflecting a growth rate of 23% [6]. - The operating profit margin is projected to decline slightly from 7.6% in 2021 to 5.9% in 2025, while the net asset return rate is expected to improve from 14.1% in 2022 to 15.5% in 2025 [6].