Introduction to this report: 2023 and 2024Q1 income maintain a trend of rapid growthBaccarat200mlThe store is expanding at a high speed, the national layout is strengthened, and the gross profit margin is low due to changes in product structure and expansion outside the province, which is expected to remain relatively stable in the future. Key points of investment: maintain the overweight rating. Considering that the gross margin is under pressure, the EPS forecast for 2024-2025 will be lowered to 1.Baccarat200ml.25Unix 1.53 yuan (formerly 1.43 yuan 1.76 yuan), increased EPS forecast 1.84 yuan in 2026, maintained target price 31.46 yuan, corresponding to 2024 PE25X, maintained overweight rating. Revenue growth is accelerating and profits are under short-term pressure. In 2023, the income was 24.531 billion yuan (+ 15.45%) and the net profit was 1.166 billion yuan, deducting the net profit of 1.141 billion yuan (+ 13.56%), of which 23Q4 realized income of 6.808 billion yuan (+ 5.87%), net profit of-8 million yuan (- 106.99%) and net profit of-23 million yuan (- 125.11%). 2024Q1 realized income of 6.752 billion yuan (+ 13.5%), net profit of 398 million yuan (- 20%), and non-return net profit of 396 million yuan (- 20%). The decline in gross profit margin put pressure on profits. The company's gross profit margin fluctuated, mainly due to the increase in the proportion of ① 's low gross profit margin wholesale business; ② continued to expand beyond Guangdong and Guangdong, but due to differences in product structure and sales scale advantages have not yet been reflected, gross profit margin in South China was 36.64% in 2023, while that in Central / East China / other regions was 28.56%, 30.58%, 28.91%. The demand of ginseng antler and non-medicine with high gross profit rate after ③ epidemic is higher, and the decline of demand from 2023H2 leads to the decrease of overall gross profit margin. At the same time, the inventory impairment of epidemic-related materials also has an impact on 2023Q4 profits. In the future, the company is expected to gradually introduce the dominant varieties into stores outside the province and increase the proportion of varieties with high gross profit margin, so as to keep the gross profit margin relatively stable. The high-speed expansion of stores will increase the distribution of the whole country. As of 2024Q1, the number of stores has reached 14915 (10305Universe 4610 respectively), of which 2023/2024Q1 has opened 4290 Universe respectively, with a total store growth rate of 40% and 37% respectively, and the opening speed is rapid. The company has stepped up mergers and acquisitions outside the province and joined. Stores have been opened in 19 provinces, and the pace of national expansion has accelerated. Risk hint: the market competition aggravates the risk, and the prescription outflow is less than expected. [disclaimer] this article only represents the views of a third party and does not represent the position of Hexun. Investors operate accordingly, at their own risk.

[disclaimer] this article only represents the views of a third party and does not represent the position of Hexun. Investors operate accordingly, at their own risk.