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Common people (603883): Endogenous and epitaxial-driven performance meets expectations
The 2019H1 results are in line with our expectations of the company’s 2019 1H results: operating income 55.34 ppm, an increase of 24 in ten years.71%; net profit attributable to parent company2.70 ppm, an increase of 22 in ten years.08%, corresponding profit 0.95 yuan.Performance is in line with our expectations. The development trend is driven endogenously and exogenously, and the income maintains 厦门夜网 rapid growth.1H2019, the company’s Chinese and Western medicine revenue 44.00 ppm, an increase of 31.68%, benefiting from endogenous epitaxy two-wheel drive; Chinese medicine income 3.0.94 million yuan, an increase of 11.01%; non-drug income 5.7.5 billion, down 4.67%, mainly due to restricted non-drug showrooms in some areas; other income1.640,000 yuan, an increase of 19.43%.As of 1H2019, the company covers a total of 4579 stores in 21 provinces, 3673 directly operated stores, and 906 franchised stores, of which 292 were newly established and 44 closed in the first half of the year. Gross profit margin decreased and the expense ratio improved.1H2019, the company’s comprehensive gross profit margin was 34.12%, down by 1 every year.74ppt, of which non-pharmaceutical gross margin decreased by 2.10ppt.Selling expense ratio 21.72%, a decline of 0 per year.82ppt; management expense ratio 4.55%, a decrease of 0 every year.17ppt; financial expense ratio is 0.46%, a decrease of 0 every year.10ppt, scale efficiency improved.Operating net cash flow 4.430,000 yuan, an increase of 21.14%, performing well. Improve professional services and strengthen chronic disease management capabilities.In order to further seize the possibility of prescription drug outflow and provide chronic disease management services, the company set up a chronic disease living hall, selected and trained more than 3,000 chronic disease experts nationwide, established personal health files for chronic disease patients, and provided one-on-one professionalDrug guidance, etc., actively explore the construction of a chronic disease management system. Earnings Forecasts and Estimates We maintain our 2019/2020 earnings forecasts1.91 yuan / 2.31 yuan; 25 years growth.31% / 20.57%, the company currently corresponds to 38/32 times P / E in 2019/2020. We maintain our company’s Outperform rating.The company’s fundamentals are stable, but considering the recent rebound in the retail sector, we raise our target price by 24% to 84 yuan, corresponding to 44/36 times P / E in 2019/2020, which may be 14 compared to the current one.71% upside. Risk expansion progress exceeded expectations; the impact of new models; industry policy risks.