Dashenlin (603233) 2018 Annual Report Comments: Store Expansion Continues, Gross Margin Increase Performance Meets Expectations

Dashenlin (603233) 2018 Annual Report Comments: Store Expansion Continues, Gross Margin Increase Performance Meets Expectations

Investment Highlights: Event: The company announced its 2018 annual report and achieved operating income of 88.

USD 5.9 billion, an annual increase of 19.

38%; net profit attributable to mothers5.

3.2 billion, an annual increase of 11.

93%; net profit deducted from non-attributed mothers5.

09 billion, an annual increase of 7.

59%, performance is in line with expectations.

Opinion: The income of Chinese medicine and non-medicine has grown rapidly, and Guangxi and Henan have developed their business rapidly.

The company’s revenue in 2018 achieved rapid growth. First of all, the annual growth of old retail stores and the opening of new stores, the contribution of acquisition of stores.

In 2018, the company added 701 self-built stores, acquired 266 stores, closed 72 stores, gradually added a total of 967 stores, and ended the company’s total of 3,880 directly-operated chain stores.

In terms of categories, the growth rates of Chinese and western medicines, ginseng and tonic, Chinese medicine decoction pieces and non-drug revenues were 16 respectively.

7%, 16.

92%, 22.

97% and 27.


In terms of regions, the company’s business grew rapidly in the East and Central China markets, with growth rates of 75.

59% and 36.

98%, mainly through store mergers and acquisitions, store sales growth brought about by the continuous improvement of regional brands.

Among them, Guangxi has 243 new stores, with an annual revenue growth of 37.

41%; Henan has 137 new stores, and its revenue is increasing by 36 each year.


Gross profit margin increased, and sales expenses dragged down profit growth.

In 2018, the company’s consolidated gross profit margin was 41.

65%, rising by 1 every year.

The gains brought by the increase in gross profit margins of the four major product categories of the 39 first-tier products mainly include: (1) the company strengthened in-depth cooperation with some brand manufacturers and the sales scale continued to increase; (2) adjusted the structure of large health categories to 深圳桑拿按摩网 make the overallInterest rates increased.
Regarding period expenses, the selling expense ratio tripled.

16 fines, driving up the expense ratio by 2.

19 averages.

The reason why the company’s return to net profit increased faster than the deduction of non-net profit was mainly due to investment income. Other income led to an increase of approximately 13 in non-recurring profit and loss.

73 times.

In a single quarter, the company’s 2019Q4 revenue has grown rapidly by 20 per year.

67%, net profit attributable to mothers grows 8 per year.

67%, the increase in sales expense rate dragged down the growth rate of the profit side.

The outflow of prescriptions is expected to accelerate, and the company is actively deploying.

With the advancement of the national procurement policy, unsuccessful pharmaceutical companies will pay more attention to expanding the sales channels of retail pharmacies, promote accelerated prescription outflow, and bring increased performance to retail pharmacies.

Although the quantity of purchased items with a reduced gross profit margin for retail pharmacies, it can bring drainage to retail pharmacies and is expected to drive sales of other higher gross profit varieties.

In 2018, the company completed the establishment of 30 DTP professional pharmacy management systems and established a complete set of DTP professional pharmacy management systems.

In terms of chronic disease management, the company has established a special disease management team to implement customer file management and build professional chronic disease service stores. The company actively participates in promoting the construction of prescription sharing platforms in key cities. At present, the company has completed the connection of prescription sharing platforms in Guangxi, Guangdong, and Henan, bringing incremental growth to the company.

Give a cautious recommendation rating.

The company continues to lay out the national market and its performance is expected to maintain a good growth momentum. It is expected that the company’s EPS in 2019 and 2020 will be 1.

59 yuan and 1.

89 yuan, corresponding to PE and 29 times and 24 times, respectively, given a cautious recommendation level.

risk warning.

Growth in store performance, progress in building new stores, and outflow of prescriptions fell short of expectations.