From the logic of the track, whether it is the increase in the chain rate or the growth of market demand, there is still a good room for growth in theory, so there is a high probability that the four listed companies in the head will have certain development opportunities. This is also the biggest advance condition for us to pay attention to this industry.
However, for an industry that is still growing first, I often remind everyone that growth must be linked to bidding, high valuation is a heavy saddle, and leaving ** to talk about growth is purely a self-deceptive behavior. However, with regard to this, it is precisely the most attractive part of Isshindo. As of the end of 2024, Yixintang has only 1162.2 billion market capitalization, 1139 times PE, almost in a state that can be fat and thin at a glance.
You know, the company can create a net profit of more than 10 billion a year, assuming that the current total market value of the company is bought up, the future only needs to reach an annualized growth rate of 3%, can recover the market value cost through ten years of cumulative net profit. And this demand for 3% growth in the future seems to me to be a very easy thing for the pharmacy business.
The pace of expansion of the company is slower than that of the other three listed pharmacies, but this slowness is only relative. First of all, according to the data of the third quarterly report, the company has 10,008 directly-operated stores, a net increase of 802 stores from the beginning of the year, which means that the number of stores in the first three quarters has increased by 871%。Subsequently, according to the overall development strategy publicly disclosed by Yixintang and a number of announcements issued successively, the company accelerated the expansion of the store network and expanded the regional competitive advantage through the method of "new opening + acquisition", and its wholly-owned subsidiaries acquired 40 store assets and inventories of Hechuan Red Sun, 71 stores of Hainan Yuan Anlong Pharmaceutical Supermarket Chain, 17 stores of Tianjin Fuyuan Pharmaceutical Chain, etc., and a total of more than 200 new pharmacies were acquired before the end of the year. In other words, there will be a net increase of more than 1,000 stores in 2023, an increase of more than 10%, which is definitely a pretty good incremental data if it is placed in other industries.
As we all know, Yixintang's base camp and largest basic market are in Yunnan, but Yunnan is actually not a province with a large population and GDP, and even some are relatively underdeveloped, but even so, Yixintang's sales and profitability can still be ranked in a more prominent position in the chain pharmacy industry.
The reason for this is that the company's retail chain stores have formed a chessboard-based network layout, which can effectively realize mutual support and support between stores. Under normal circumstances, the radiation area of a single store is about 3 kilometers, covering a population of about 3,000 people, which has no say in the volume of upstream pharmaceutical companies, and the purchase of drugs is high. However, after the "high-density" in-depth distribution of Yixintang, on the one hand, a huge purchase volume has been formed, and enough discounts can be obtained from pharmaceutical companies, so that the procurement cost is low, and a network support is formed between each point, reducing the overall logistics cost; On the other hand, due to the high density, the migration of a customer anywhere in the city will not have a large impact and will not cause customer churn. Therefore, under this structure, the importance of a single store to the entire network system is reduced, and for the relocation and demolition of stores on some nodes, the company can choose other nodes to supplement and improve the business network in a timely manner, which is in fact equivalent to bringing a solid guarantee to performance.
At the same time, this "high-density" distribution method, the suppression of the basic small pharmacies in the plate is all-round, small pharmacies have only two choices, either by the leading gradually merger and acquisition, or by the elimination of the survival of the fittest, further consolidating the company's market position, forming a potential regional monopoly.
In addition, Yixintang is not indifferent to the expansion outside the province, and the company has previously made it clear that "the company will gradually strengthen the expansion speed of stores outside Yunnan and improve the scale effect of store operation in various markets". It's just that the company's choice is to start from Yunnan, mainly in the southwest region, when Guizhou, Sichuan and Chongqing cloth stores reached a certain density, and began to set foot in Tianjin, Hainan, Shanxi and other regions. One of the characteristics of this regional expansion is that the company is not keen to compete with others for economically developed and densely populated hot areas, but chooses a relatively unpopular area to dig deeply, avoid fierce short-handed encounters as much as possible, and rely on its own characteristics to turn the relatively barren market into a cornucopia. This is actually similar to the company's playing style in Yunnan, not caring about the quality of the region, but about eating deeply.
From the above, it is not difficult to see that the company continues to maintain moderate growth is not a big problem, and under the current low expectations, it should be the most cost-effective of the four major pharmacies.
Risk Warning: The views mentioned in this article only represent personal opinions, and the subject matter involved is not recommended. ）