Yixintang (002727): Steady expansion in scale and sustained high-speed growth

The event company released the first quarter of 2019 report. The company achieved operating income in the first quarter of 2019. The net profit attributable to the parent and the net profit after deduction are 25 respectively.

880,000 yuan, 1.

7.5 billion and 1.

72 ppm, an increase of 18 each year.

77%, 33.

51% and 30.

50%, achieving a profit of 0.

31 yuan, on the one hand, operating cash flow is 0.

31 yuan, in line with our democratic expectations.

The scale of the brief review has steadily expanded, and the performance has maintained rapid growth. In the first quarter of 2019, the company achieved operating income. The net profit attributable to the mother and the net profit after deduction were 25.

880,000 yuan, 1.

7.5 billion and 1.

72 ppm, an increase of 18 each year.

77%, 33.

51% and 30.

50%, performance still maintained rapid growth.

Mainly because: 1) Expenses are well controlled. In terms of selling expenses, the reduction of sales promotion is mainly in the form of gifts for drug purchases. At the current stage, price reduction promotions are used, so the sales expense rate has decreased while the gross profit margin has declined slightly.

The overhead rate was reduced to 3.

77%, management expenses are well controlled.

In the future, the company is expected to continue to maintain rapid growth in performance; 2) The profit increase brought by the tax reform exceeds 10 million, and the endogenous growth rate is more than 20%.

From the perspective of store expansion, the company adopts self-built main mergers and acquisitions as a supplement to its store expansion. It is expected that the asset price will fall to a reasonable range, H2, which tends to force mergers and acquisitions.

In Q1 single quarter, the company built 275 stores by itself, considered profitability to close 6 stores, and considered the optimization of the layout and relocation of 22 stores. The total number of stores was reduced by 28, and the total number of stores increased by 247, of which Yunnan increased 144,It increased by 45, Guangxi increased by 26, Hainan increased by 14, Shanxi increased by 10, Guizhou increased by 9, Henan increased by 2, and the total number of stores reached 6005.

The proportion of stores outside the province further increased to 38.

33%, the scale outside the province continued to expand.

The promotion resulted in a slight decrease in gross profit margin, the effect of fee control was obvious, and cash flow improved. The remaining financial indicators were basically normal. In the first quarter of 2019, the company’s gross profit margin reached 38.

12%, down 2 from the annual report.

41, mainly due to the increase in price reduction promotions; sales expenses supplemented 25.

55%, a decline of 3 per year.

For 15 units, the sales expenses were well controlled while the scale of revenue expanded.

Management expenses 3.

77%, a decrease of 0 from the annual report.

With 58 averages, management costs are better controlled.

The financial expense ratio reaches zero.

14%, a decline of 0 per year.

38 units.

Accounts receivable decrease by 6 every year.

59%, bills receivable are down 73 per year.

81%, mainly due to strengthened communication with the Medical Insurance Bureau, medical insurance returns are better; the net cash flow from operating activities increased by 138 per year.83%, mainly due to the increase in the amount of medical insurance payments.

The remaining financial indicators are basically normal.

Profit forecast and investment rating We expect the company to achieve operating income of 97 in 2018-2020.

02 billion, 119.

74 million and 147.

1.5 billion, net profit attributable to mothers is 5 respectively.

4 billion, 6.

810,000 yuan and 8.

450,000 yuan, an annual increase of 27.

7%, 26.

2% and 24.

1%, equivalent to 0 respectively.

95 yuan / share, 1.

20 yuan / share and 1.

49 yuan / share, corresponding to an estimated 27.

8X, 22.

0X and 17.

8x, maintain BUY rating.

Risk analysis: The store expansion progress exceeded expectations; the store’s profitability declined; the prescription outflow progress was gradually expected;