Yifeng Pharmary(603939) 东方证券·2024-09-09 13:40Investment Rating - The report maintains a "Buy" rating for the company with a target price of 23.76 RMB [2][4] Core Views - The company achieved steady growth in both revenue and net profit in H1 2024, with revenue reaching 11.76 billion RMB (+9.9% YoY) and net profit attributable to shareholders of 800 million RMB (+13.1% YoY) [1] - The company's operating cash flow increased significantly by 29.4% YoY to 1.82 billion RMB, driven by organic growth, M&A, and franchise expansion [1] - The company's cost efficiency improved, with the sales expense ratio decreasing to 25.6% (-0.2 pct) and the management expense ratio dropping to 4.1% (-0.2 pct) [1] - The company's O2O business grew rapidly, with O2O sales reaching 880 million RMB (+26.3% YoY), and over 10,000 stores now offering O2O services [1] Store Expansion - The company added 1,575 new stores in H1 2024, including 842 self-built stores, 293 acquired stores, and 440 new franchise stores, resulting in a net increase of 1,486 stores [1] - As of H1 2024, the company operates a total of 14,736 stores, including 11,310 directly operated stores and 3,426 franchise stores [1] - 88.3% of the directly operated stores have obtained medical insurance retail qualifications, totaling 9,984 stores [1] Financial Forecasts - The report revised the company's revenue and gross margin forecasts for 2025, with adjusted net profit forecasts for 2024-2026 at 1.601 billion, 1.919 billion, and 2.263 billion RMB, respectively [2] - The company's revenue is expected to grow at a CAGR of 16.5% from 2024 to 2026, reaching 33.534 billion RMB by 2026 [3] - The net profit margin is projected to remain stable at around 6.5%-6.7% from 2024 to 2026 [3] Industry Trends - The retail pharmacy industry in China has seen increasing chain rates and market concentration, with the chain rate reaching 58.5% in 2023 [1] - The sales growth rate of the top 100 companies in the industry was 9.6% in 2023, significantly higher than the industry average of 2.9% [1] Valuation - The company's PE ratio is expected to decline from 18.3x in 2022 to 10.2x by 2026, reflecting strong earnings growth [3] - The EV/EBITDA ratio is projected to decrease from 8.2x in 2022 to 4.9x by 2026, indicating improving valuation metrics [8]