The weakening of the base effect and the release of profits from new stores will lead to an upward turning point in the performance of chain drugstores in 2022 or to valuation repair

2022-04-24 0 By

The base effect is weakened and the profits of new stores are released, and the performance inflection point of chain drugstores in 2022 is upward or the valuation is repaired. Zhongtai Securities Research report points out that the high base overlay of the epidemic is repeated, and the chain drugstore plate is under periodical pressure in 21 years.But in 2022, with the weakening of base effect and the release of profits from new stores, the performance of leading chain drugstores has a clear upward trend and is expected to usher in valuation repair.In 2020, benefiting from the epidemic, the average growth rate of same-store sales in retail pharmacies was 13.81%, the highest in the past five years.Although the epidemic was under control in 2021, the prevention and control policies were not relaxed. In order to avoid crowds gathering under the epidemic, promotional activities of pharmacies were also reduced compared with previous years, resulting in reduced customer flow and slower climb of new stores.In addition, in areas with recurrent epidemics, the sale of fever-reducing, cough relieving, antiviral and antibacterial drugs is restricted or strict registration is required, which has a great impact on customer flow and sales of retail pharmacies.The high base effect catalyzed by the epidemic has gradually weakened since Q4, 2021, and combined with the release of profits from new stores, the turning point of performance in 2022 is clear.2) Leading drugstores are accelerating their expansion. New stores are expected to contribute to the incremental growth of major listed drugstores such as Dasanlin, Yifeng pharmacy, Common People, Yixintang and Jianzhijia in the first three quarters of 2021, with the net increase of stores of 1590/1255/1770/1151/557 respectively, which has exceeded the total number of stores in 2020. The expansion of leading drugstores is accelerating significantly.In 2021, affected by the epidemic and other factors, the climbing speed of newly opened stores in the industry generally slowed down.Zhongtai Securities believes that the newly opened stores in 21 years are expected to contribute significant revenue increment from the first half of 2022, and profit contribution is expected to be reflected in the second half of the year due to the longer break-even cycle.By Q3 of 21st year, the proportion of secondary new stores of Yifeng Pharmacy, Dasanlin, Common people and Ilshitang were respectively 17%, 16%, 18% and 14%, all at historical highs, and the follow-up will continue to provide performance momentum.3) The concentration degree of drugstore industry will continue to steadily increase under policy encouragement. In October 2021, the Ministry of Commerce proposed in the Guidance on Promoting high-quality Development of Drug Circulation Industry during the 14th Five-Year Plan Period: in the next five years, it plans to cultivate 5-10 drug retail chain enterprises of over 50 billion yuan;By 2025, the drug retail chain rate will be close to 70%.In 2020, the total number of pharmacies in China is 546,000, and the overall chain rate is 57.3%, which is still far from the “14th Five-year plan” planning target.From the perspective of the overall industry environment, with the promotion of the classification policy of drugstores, the continuous strengthening of industry standardization will accelerate the differentiation. The leading enterprises have obvious advantages in information construction, talent reserve and other aspects, and are expected to seize the initiative in the wave of industry integration.In recent years, the proportion of prescription sales in retail pharmacies has been steadily increasing. According to the data of Chinese Pharmacies, the proportion of prescription drug sales in 2015 was 33.8%, and by 2020, it has reached 43.6%.In 2021, the new policy of “dual channel” was introduced, and the payment standards of in-hospital and out-of-hospital medical insurance for dual-channel varieties were unified, and the out-of-hospital channel value of retail pharmacies was further recognized.Since the second half of 2021, dual-channel policies have been implemented in various provinces, and dual-channel varieties continue to expand. Retail pharmacies are expected to undertake more external prescriptions.In addition, the access of pharmacies to medical insurance pooling accounts continues to advance, and leading chain pharmacies with more advantages in professional qualifications, categories, logistics and other aspects will benefit significantly.* Disclaimer: The content of this article is for reference only, does not constitute investment advice * Risk tip: the stock market is risky, the market should be cautious