Yifeng Pharmary(SH:603939) Donghai Securities·2024-05-08 08:00Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company's 2023 performance slightly underperformed expectations, leading to a downward adjustment in profit forecasts for 2024 and 2025, with the addition of a forecast for 2026. The expected net profits for 2024, 2025, and 2026 are projected to be 1.74 billion, 2.13 billion, and 2.59 billion yuan respectively, with corresponding EPS of 1.72, 2.11, and 2.56 yuan, and PE ratios of 26.39, 21.57, and 17.77 times [7][8] Financial Performance Summary - In 2023, the company achieved revenue of 22.59 billion yuan and a net profit of 1.41 billion yuan, representing year-on-year growth of 13.6% and 11.9% respectively. The fourth quarter saw revenue of 6.70 billion yuan and a net profit of 413 million yuan, with year-on-year changes of 2.5% and -5.8% [8] - For Q1 2024, the company reported revenue of 5.97 billion yuan and a net profit of 407 million yuan, showing year-on-year increases of 13.4% and 20.9% [8] Expansion Strategy - The company has a total of 13,920 stores across ten provinces as of Q1 2024, with plans to add 4,000 new stores in 2024, including 1,800 self-built, 700 through acquisitions, and 1,500 franchises [8] - The company aims to strengthen its presence in central and eastern China while expanding nationwide, leveraging regional brand effects and scale advantages [8] Revenue Structure - Retail revenue grew steadily, while wholesale business saw rapid growth. In 2023, retail revenue was 20.19 billion yuan with a gross margin of 39.6%, and wholesale revenue was 1.89 billion yuan with a gross margin of 9.4% [8] - The company’s product categories include traditional Chinese medicine and Western medicine, with respective revenues of 17.10 billion yuan and 2.18 billion yuan, reflecting growth rates of 15.9% and 23.3% [8] Profitability - The company's gross margin for 2023 was 38.2%, with a net margin of 7.0%. The first quarter of 2024 saw a gross margin of 39.3% and a net margin of 7.5% [9] - The company’s expense ratios for sales, management, and finance were 24.3%, 4.3%, and 0.4% respectively, indicating effective cost management [9]