ShuYu Civilian Pharmacy (SZ:301017) KAIYUAN SECURITIES·2024-04-10 16:00Investment Rating - The report gives a "Buy" rating for the company, indicating a positive outlook for its future performance [66]. Core Insights - The retail pharmacy market in China is expected to grow significantly, driven by policy support, increasing chain concentration, and enhanced professional capabilities [14]. - The company is focusing on expanding its store network through a combination of self-built, acquired, and franchised stores, with a strong emphasis on the Shandong market and plans for national expansion [23][26]. - The retail pharmacy industry shows a low concentration of leading players, suggesting substantial growth potential for companies that can leverage scale advantages [7]. Summary by Sections Retail Pharmacy Market Overview - The retail pharmacy market in China has seen a steady increase in sales, with a compound annual growth rate (CAGR) of 8.2% from 2013 to 2022, growing from 255.8 billion to 520.9 billion [14]. - The chain rate of retail pharmacies varies significantly across regions, with Shanghai having the highest rate at 92.09%, compared to a national average of 57.76% [4][2]. Company Strategy and Expansion - As of Q3 2023, the company operates 6,778 stores, with 4,015 being self-operated and 2,763 franchised, primarily concentrated in Shandong [23][26]. - The company aims to enhance its market share in the Northeast region through acquisitions, capitalizing on the lower chain rates in that area [41][37]. Financial Projections - The company expects retail business revenue growth rates of 17.60%, 29.21%, and 25.12% for 2023, 2024, and 2025, respectively, with a stable gross margin of 31% [62]. - The projected total revenue for 2023 is 7.823 billion, with a year-on-year growth of 19% [64]. Online and Digital Strategy - The company has developed a robust online sales platform, achieving 5.8 billion in online revenue in H1 2023, a 61% increase year-on-year, accounting for 13.6% of total revenue [49]. - The integration of public and private domain marketing strategies has significantly enhanced customer engagement and sales performance [50]. Brand Development and Product Diversification - The company is actively developing its own product lines, including traditional Chinese medicine and health products, with a focus on appealing to a diverse customer base [58]. - The introduction of the "漱小玉" brand aims to enhance brand recognition and community engagement through various initiatives [54].