Yifeng Pharmacy (603939) Semi-annual Report of 2019 Comment: Sustained High Performance, Plans to Use Convertible Bond Financing to Boost Expansion

Yifeng Pharmacy (603939) Semi-annual Report of 2019 Comment: Sustained High Performance, Plans to Use Convertible Bond Financing to Boost Expansion
Event: The company released its 2019 interim report and public offering of convertible bonds.In the first half of 2019, it achieved operating income of 50.4.8 billion (+68.65%); net profit attributable to mother 3.08 thousand yuan (+36.78%); deduct non-net profit 3.3.0 billion (+46.69%). At the same time, the company plans to issue convertible bonds to finance no more than 15.8.1 billion. Core points: 1. Performance continued to grow at a rapid rate, and store consolidation and mergers and acquisitions increased.By quarter, Q1 / Q2 achieved revenues of 24 respectively.69/25.79 trillion, the annual growth rate was 66.67%, 70.59%, the rapid growth in performance is still due to the old stores (about + 10%), three-wheel drive for new stores and mergers and acquisitions.In 2019H1, the company added 516 stores, including 368 new stores (including 87 franchisees), 204 M & A stores, 56 closed stores, and a total of 4,127 stores (including 256 franchises). In the first half of 2019, the self-built rate of the company’s stores was about 70% (only 40% in 2018), which is in line with the new expansion strategy based on new stores.At the same time, the company has accelerated mergers, acquisitions and mergers. Taking Hebei Xinxing Pharmacy as an example, the net profit margin increased significantly to 8.1%, the emerging semi-annual report has completed 55% of the performance commitments, a high probability of meeting performance expectations. 2. Excellent refined management ability, optimized expense ratio and stable net interest rate.Due to changes in medical insurance control fees and product structure, gross profit margin decreased to 39.09%.Based on excellent and refined management, the cost is well controlled under the situation 武汉夜生活网 of both capital and labor costs rising (sales expense ratio -1.85%), the net interest rate is basically stable at 6.76%. 3. Plan to issue convertible bonds to raise funds15.810,000 yuan, upgrade the operation management system and help future expansion.The company intends to issue convertible bonds to raise no more than 15.US $ 8.1 billion for project intelligent product sorting, digital intelligent management, industrial park and other projects, upgrading the operation management system and expanding the foundation for future expansion. 4. Maintain the “overweight” rating.The EPS is expected to be 1 in 2019-2021.52/2.04/2.62 yuan, corresponding to a 50/37/29 reduction in dynamic market surplus.As the leader of regional chain pharmacies, the company is fully enjoying the rising concentration of the industry concentration. Based on excellent fine management and M & A integration capabilities, the company continues to optimize its operation management system.increase. 5. Risk warning.Industry policy risk, human resources risk, goodwill impairment risk, etc.