Dashenlin (603233): National strategy for acquisition of Nanhai Jianghai Pharmacy steadily advances

Dashenlin (603233): National strategy for acquisition of Nanhai Jianghai Pharmacy steadily advances

This report reads: The company intends to acquire 51% equity in Nantong Jianghai Pharmacy, expand the regional market in Jiangsu, steadily advance its national strategy, and maintain an overweight rating.

Investment Highlights: Maintain Overweight rating.

The company intends to acquire 51% equity of Nantong Jianghai Pharmacy to expand the regional market in Jiangsu and steadily advance its national strategy.

Considering that the company’s performance in the first three quarters of 2019 was slightly higher than expected, it raised its 2019-2021 forecast EPS to 1.

36/1.

66/2.

05 yuan (was 1).

31/1.

60/1.

92 yuan), maintain target price to 64 yuan, corresponding to 39X in 2020, maintain overweight rating.

The underlying assets are of high quality and better profitability.

Jianghai Pharmacy is the leading pharmacy in Nantong. There are currently 123 directly operated stores (113 have opened and 10 have not been opened), of which 86 are medical insurance stores, which are located in Nantong City and surrounding counties.

Revenue in 2018 1.

2.4 billion, net profit of 4.37 million yuan, net interest rate 3.

52%; Revenue from January to July 20191.

130 thousand yuan, net profit 6.04 million yuan, net interest rate 5.

35%, better profitability and potential for internal growth.

The estimates are relatively reasonable, increasing profits and creating a dominant area.

The company acquisition is assessed as PS1.

1376X, which can be adjusted based on the achievement of performance commitments.

2019-2021 commitment (including tax) is not less than 2.

20/2.

53/2.

91 trillion, deducting non-net profit is not less than 1200/1380/1587 million yuan, and it is expected that the deduction of non-net profit will 南宁桑拿 increase in 20191.

2%.

The acquisition is in line with the company’s expansion strategy concept of “deeply cultivating South China and distribute nationwide”, which is conducive to expanding the brand influence and further creating an advantageous area.

Leaders are expected to continue to benefit from industry transformation.

After the early store expansion and effective integration, the company ushered in an increase in growth in 2019.

In the long run, the increase in industry supervision will significantly help regulatory stores to obtain marginal advantages. Currently, Guangdong is exploring the use of provincial drug procurement platforms for retail drug stores to purchase varieties, which will be beneficial for drug stores to play a role in the overall drug supply security system in the future.Explore, as the regional leader in Guangdong, the company is expected to continue to benefit in the future.

Risk warning: The profitability of new stores is lower than expected, and the pace of store expansion is lower than expected.

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