Yixintang Pharmaceutical (SZ:002727) Orient Securities·2024-03-21 16:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 21.71 CNY based on a PE valuation of 13 times for 2024 [3][21]. Core Insights - The company is expected to benefit from its expansion outside Yunnan, with a total of 5,358 stores in Yunnan (53.54% of total) and 4,650 stores outside Yunnan (46.46%), primarily in the Sichuan-Chongqing region [2][4]. - The company has adjusted its earnings per share (EPS) forecasts for 2023-2025 to 0.92 CNY, 1.67 CNY, and 1.96 CNY respectively, down from previous estimates due to a decline in demand for pandemic-related medications [3][19]. - The company has shown a steady pace of store expansion, with a total of 10,255 stores by the end of 2023, adding 1,381 new stores throughout the year [4][19]. Financial Performance - The company's revenue for 2023 is projected at 17,380 million CNY, with a slight decline of 0.3% year-on-year, followed by expected growth of 17.9% in 2024 and 16.2% in 2025 [23]. - The net profit attributable to the parent company is forecasted to be 550 million CNY in 2023, a decrease of 45.6% year-on-year, but is expected to rebound to 993 million CNY in 2024 and 1,166 million CNY in 2025 [23]. - The gross margin is expected to decline to 32.5% in 2023, with a slight recovery to 32.6% in the following years [23]. Market Position and Strategy - The company is enhancing its management capabilities and has seen rapid growth in its online business, achieving online sales of 599 million CNY in the first three quarters of the year [19]. - The company has a strong membership base with 41.8 million members, contributing to a 7.64% year-on-year increase in non-pharmaceutical revenue [19].