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Yixintang (002727) 2019 Interim Review: Policy shocks drag on short-term profit growth

Yixintang (002727) 2019 Interim Review: Policy shocks drag on short-term profit growth

Company dynamics The company released its semi-annual report for 2019.

  Comment on the matter Affected by factors such as the rigorous supervision of licensed pharmacists, the profit growth rate of 19Q2 has improved.

600,000 yuan, an annual increase of 17.

90%; net profit attributable to mother 3.

3.7 billion, an annual increase of 15.

31%; deduction of non-net profit3.

3.4 billion, an annual increase of 15.

09%.

By quarter, the company achieved operating income of 24 in Q2 2019.

7.2 billion, an annual increase of 17.

00%; net profit attributable to mother 1.

6.2 billion, an annual increase of 0.

49%, the sharp decline in profit growth was mainly affected by the tightening supervision of licensed pharmacists in Yunnan Province and other factors.

  In March 2019, the Yunnan Provincial Drug Administration issued the “Notice on Printing and Distributing the Work Plan for the Rectification of Licensed Pharmacists of Pharmaceutical Retail Enterprises in Yunnan Province”, and decided to implement the 6-month “Pending License” of Pharmaceutical Pharmacists Licensed by Drug Retail EnterprisesThe rectification requires that new stores after 2016 must be equipped with licensed pharmacists. March 25 to April 30 is the self-examination and rectification stage, and May 1 to August 30 is the supervision and inspection stage.

In July 2019, the Yunnan Provincial Drug Administration issued the “Announcement on Opinions on Further Promoting the Healthy Development of Drug Retail Enterprises”, requiring that drug retail chain enterprises should have at least 3 licensed pharmacists in 10 base stores, and add 1 for every 15 additional stores.Practicing pharmacist.

With the advancement of medical reform policies such as the remote examination party business in Yunnan Province, and the rapid increase in the number of effective registered pharmacists in Yunnan Province, the company’s business in Yunnan Province is expected to gradually improve.

  The store expansion in 19Q2 improved, and the net increase in the number of stores in the second half of the year is expected to be gradually extended to the end of June 2019. The company has 6,129 direct-operated chain stores, which has continued to grow16.

43%, of which 247 and 124 were newly added in 19Q1-Q2. The expansion of 19Q2 stores improved due to the policy. The company plans to increase store expansion in 19H2.

Considering that the company plans to build 1,200 new stores in 2019, it is expected that the number of net new stores in the second half of 2019 will reach the expected increase.

By region, the number of stores outside Yunnan Province accounted for 38.

86%, an increase of 0 from the end of 2018.

67 goals, taking into account the industry supervision and upgrade in Yunnan Province, the company ‘s strategy to expand the store in Yunnan Province and the province ‘s store plan, and other factors, it is expected that the company will continue to deepen the store layout in Yunnan Province in the future, focusing on the expansion of Sichuan, Chongqing, Guiqiong,Key areas such as Shanxi.

  The gross profit margin of sales has declined, and the company’s expense ratio is well controlled during the period. The gross profit margin of the company in the first half of 2019 was 38.

79%, a decrease of 3 per year.

The 03 targets are expected to be mainly due to the increase in the proportion of sales of prescription drugs and the low gross profit margin caused by new store promotions.

The company’s expenses during the first half of 2019 were 30.

48%, down by 1 every year.

47 totals, of which 26 are sales 青岛夜网 expenses.

63%, down by 1 every year.

28 singles, through the increase of store age, the proportion of expenses such as rent and promotional fees were diluted, which drove the company’s overall sales expense ratio to decline.

  Risks prompt that store expansion is slower than expected risk; new store operation of mergers and acquisitions is less than expected risk; industry policy risks such as two-vote system, tiered diagnosis and treatment; innovative business development such as pharmaceutical e-commerce is less than expected risk; goodwill impairment risk investment recommendations for the futureFor six months, we maintain a “cautious overweight” rating and expect the company’s EPS to be 1 in 19 and 20 years.

11, 1.

37 yuan, with a closing price of 26 on August 20.

67 yuan calculation, the dynamic PE is 24.

0西安耍耍网2 times and 19.

42 times.

We believe that: 1) In the short term, the industry’s oversight has severely dragged down the company’s performance, and has been transformed into medical reform policies such as the remote audit party business in Yunnan Province. The company’s internal business in Yunnan Province is expected to gradually improve; 2) The company continues to focus on external issues in Yunnan ProvinceThe development of regions (Sichuan, Chongqing, South China, North China, etc.) was carried out. Through standardized store operation systems and regional scale direct sales and other competitive advantages, the alternative store chain replication ability was guaranteed, and the conversion of the regional market share outside Yunnan province gradually expanded.The company contributes performance flexibility.

In the next six months, we will maintain a “cautious increase” rating.