LBX(SH:603883) INDUSTRIAL SECURITIES·2024-05-14 02:02Investment Rating - The report maintains a "Buy" rating for the company, with a focus on expanding its market presence and enhancing profitability through various strategies [1][14]. Core Views - The company has significantly improved its profitability, driven by initiatives such as the "Torch Project," which has enhanced its gross margin [2][5]. - The company is actively expanding its store network, having opened 3,388 new stores in 2023 and 642 in Q1 2024, bringing the total to 14,109 stores [1][9]. - The company is focusing on digital transformation and cost reduction to improve operational efficiency and profitability [11][12]. Financial Performance Summary - In 2023, the company achieved revenue of 22.437 billion yuan, a year-over-year increase of 11.21%, and a net profit of 929 million yuan, up 18.35% [4][5]. - For Q4 2023, revenue was 6.396 billion yuan, with a slight decline of 0.05% year-over-year, while net profit increased by 21.17% to 212 million yuan [4][5]. - In Q1 2024, the company reported revenue of 5.539 billion yuan, a year-over-year increase of 1.81%, and a net profit of 321 million yuan, up 10.27% [4][5]. Profitability and Margin Analysis - The gross margin for Q1 2024 improved to 35.20%, an increase of 2.20 percentage points year-over-year, attributed to the implementation of the "Torch Project" [2][9]. - The company’s gross margin for 2023 was 32.55%, reflecting a year-over-year increase of 0.67 percentage points [13]. Market Expansion and Strategy - The company has established a presence in 18 provincial markets and over 150 cities, capturing approximately 75% of the Chinese pharmaceutical retail market [1][9]. - The company is focusing on a multi-faceted growth strategy that includes direct sales, acquisitions, franchising, and alliances to enhance market share in key provinces [9][11]. Earnings Forecast - The earnings per share (EPS) forecast for 2024-2026 is projected at 1.47, 1.77, and 2.14 yuan, respectively, with corresponding price-to-earnings (PE) ratios of 24.1X, 19.9X, and 16.5X [1][14].