Greater Ginseng Forest (603233): Deep Plowing in South China, Fast Growth, Fine Management and High Efficiency

Revenue maintained rapid growth, with both traditional and emerging businesses capturing the company’s operating income in the first half of the year52.

5 billion (+28.

7%), with an average growth rate of 12pp over the same period of the previous year. Revenue growth and growth. Sales of old stores increased. The total number of self-built and acquired stores in the year totaled 4,153. The company has a net increase of 273 stores.Closed 40 homes).

The number of stores increased by 22% compared with the same period last year.

From the perspective of the divided regions, in the first half of the year, South China grew 23%, Central China 49%, and East China 67%. Most of the company’s business is in South China. The newly developed Central China, East China has a high growth rate.

There was a net increase of 212 in South China, 2 in East China, 40 in North China, and 19 in Central China.

The company gradually and steadily promotes the growth of traditional business, and the old store contributes 9% growth, including the impact of passenger flow and customer unit price; gradually develops DTP, O2O, and prescription drug outflow work. In the first half of the year, prescription drug sales accounted for 30%, a growth rate of 32%Above the overall growth rate, 45 DTP pharmacies have been established.

The growth rate of over-the-counter medicines was close to the overall level and remained stable; the growth of non-medical medicines was slow; the growth of Chinese herbal medicines was faster.

From the perspective of the environment, the company benefits from the growth of the resident population in the Greater Bay Area.

It is expected that this year and next year will continue to maintain the speed of about 1,000 new stores.

Net profit attributable to mother 3.

800 million (+32.

2%), an increase of 16pp compared to the same period last year.

Deduct non-net profit 3.

700 million (+33.

9%), an increase of 23pp compared to the same 深圳spa会所 period last year.

In addition to the reasons for the increase in revenue, the company strengthened management, controlled expenses, and achieved higher growth in profit.

The gross profit margin decreased slightly, and the cost-effectiveness of the carding structure decreased on average. The company’s gross profit margin was 40 in the first half of the year.

0%, a decrease of 1 over the same period last year.

7pp.

The prescription drugs with a longer gross margin subsidy grew faster and the proportion of prescription drugs increased; and the feedback to members and consumers was expanded to increase customer stickiness.

Selling expense ratio 25.

4%, down 2 from the same period last year.

2pp.

Management expense ratio 4.

05%, a decrease of 0 compared with the same period last year.

22pp.

Finance expense ratio is 0.

28%, a decrease of 0 compared with the same period last year.

11pp.

The growth rate of management expenses is lower than before and the industry level. This is because the structure was combed in the first half of the year, and transparency and automation were used to improve efficiency, thereby controlling back-office labor costs.

Judging from the company’s level of efficiency, it can also be at the industry level, focusing on the efficiency of distribution management in Guangdong and Guangdong.

The profit forecast and investment rating are expected to be 1 for the company’s EPS in 19-21.

35/1.

71/2.

18 yuan, the corresponding PE is 43.

6/34.

5/27.0 times.

Give Buy rating with a target price of 67.

5 yuan.

Risk warning: medical insurance policy, internet drug sales, etc.