Pharmacy stocks, collectively plummeted!

Sharp eyes on finance

2024-07-01 18:17Ruiyan looks at the official account of Finance

Some time ago,One of the listed domestic pharmacy companies, Yixintang, last year sold lottery tickets to earn more than 76 million on Weibo hot search,I didn't expect that a month later, this matter turned out to be the cause of the A-share pharmacy listed company stock price "butterfly effect" of the vibrating butterfly wings,The pharmacy industry was shocked!

Pharmacies sell lottery tickets across borders, triggering strong supervision in the industry

On June 3 this year, a topic entitled #Listed pharmacies sell lottery tickets for 76.98 million a year #, rushed to the hot search on Weibo, causing heated discussions among netizens. As of today (July 1), this topic has been read more than 50 million times and discussed more than 8,400 times.

The contents involved in this topic include: 1. Yixintang, an A-share listed pharmacy, was interviewed by the National Health Insurance Administration on May 24 and was suspected of violating the relevant provisions of the medical insurance management regulations; 2. According to the 2023 financial report released by Yixintang, more than 3,000 stores in 8 provinces and cities including Hainan, Sichuan, Chongqing, and Tianjin have carried out the "pharmacy + lottery" business pilot, and the sales volume of Yixintang Cai Lottery in 2023 will be 76.98 million yuan; 3. As of the first quarter of this year, Yixintang has 107.46 million directly operated chain stores nationwide, ranking among the "10,000 store clubs".

(Screenshot of Yixintang's 2023 financial report)

Pharmacies sell lottery tickets, which is indeed a novelty, and selling lottery tickets for nearly 80 million yuan a year. Some netizens in the comment area questioned that pharmacies can also swipe medical insurance cards when they buy lottery tickets?

It stands to reason that even if you sell lottery tickets in pharmacies, you shouldn't be able to swipe your health insurance card. However, the previous (May 24) interview with Yixintang by the Health Insurance Bureau did involve the issue of medical insurance violations.

(Screenshot of the WeChat public account of the National Health Insurance Administration)

Pharmacies sell lottery tickets、Pharmacies were interviewed by the Medical Insurance Bureau,These two things are put together,It's really easy to make people have questions about buying lottery tickets by swiping medical insurance。

On March 19 this year, Yixintang also said in its 2023 performance express report that its subsidiaries in various regions accept tax counseling from local tax bureaus, and the company needs to pay back taxes and late fees totaling more than 300 million yuan.

(Screenshot of Yixintang's 2023 performance report)

The above is just the situation of Yixintang's one pharmacy, and it can be seen that Yixintang, as a national pharmacy, does have violations in some aspects!

Obviously, there is definitely more than one pharmacy with violations.

On April 8 this year, Dashenlin, who is also a listed pharmacy, announced that Ke Jinlong, one of the actual controllers and then director, and a subsidiary of Maoming were suspected of bribery and were prosecuted in accordance with the law, and Ke Jinlong was taken into criminal detention and administrative supervision measures by the Guangdong Securities Regulatory Bureau.

(Screenshot of Dashenlin's announcement)

The above violations of relevant pharmacies show that there is indeed a need to strengthen supervision in the pharmacy industry, and there are too many violations and chaos!

On the day of the hot search with a year's income of more than 76 million from selling lottery tickets in Yixintang,It is reported that the medical insurance bureau on the Internet will compare the drug prices of various channels with the online drug sales platform"Instant price"The document has been sent to the local medical insurance bureau procurement office。

(Source: Sina Finance)

This document is obviously aimed at a series of drug store violations such as the high price and sales price of most pharmacies for a long time, and even suspected of applying medical insurance funds or illegally occupying medical insurance funds.

After the crazy expansion

Pharmacies are stuck in high debt and low profits

Regarding the pharmacy industry, it seems that it has indeed become a "100-meter store", with pharmacies everywhere in the streets and alleys, and even 2-3 pharmacies in the slightly larger community.

The crazy expansion of the number of pharmacies shows that the pharmacy industry is indeed profitable, and the long-term high profits attract external funds to enter the market. However, as the streets and alleys were "filled" with pharmacies, the pharmacy industry has entered the red sea of competition, and the fierce competition has forced some pharmacies to close.

According to the data, by the end of 2023, the number of pharmacies in the country has exceeded 660,000, and the annual sales scale of drug retail terminals will be 923.3 billion yuan, a year-on-year increase of 5.8%, and the growth rate will hit a record low. Behind this data, the market share of the leading pharmacies, including Yifeng Pharmacy, Dashenlin, and Laobaimin, is only 2%-3%, and the market competition is relatively sufficient.

Therefore, some people ridicule that there are now more pharmacies than bubble tea shops!

As of the end of the first quarter of this year, there were 21,200 Jointown, 13,900 Yifeng Pharmacy, 10,300 Dashenlin direct stores, and 9,470 ordinary people. Among them, the number of ordinary people's stores has decreased significantly compared with the end of 2023, and the total number of ordinary people's stores at the end of 2023 is 13,600.

(The number of ordinary stores, data source: Straight Flush website)

The number of stores in these listed pharmacies is more than one, and the corresponding debt is higher than the other, but the net profit margin is lower than the other.

As of the end of the first quarter of this year, the accounts payable of Jointown were 42.681 billion, accounting for 43.89%, and the asset-liability ratio was 68.26%, the accounts payable of Yifeng Pharmacy were 8.004 billion, accounting for 30.59%, and the asset-liability ratio was 57.69%, the accounts payable of Dashenlin was 7.647 billion, accounting for 30.14%, and the asset-liability ratio was 66.66%, and the accounts payable of the people were 6.919 billion, accounting for 32.37%, and the asset-liability ratio was 64.17%.

(Jointown accounts payable, data source: Straight Flush website)

(Yifeng Pharmacy accounts payable, data source: Straight Flush website)

(Dashenlin accounts payable, data source: Straight Flush website)

(People's accounts payable, data source: Straight Flush website)

Pharmacies are typical commodity circulation enterprises, and their main debt is the payment payable to upstream suppliers (pharmaceutical companies), as can be seen from the accounts payable of pharmacies, the past ten years have been a period of crazy expansion of domestic pharmacies, but since 2022, the accounts payable of some pharmacies have begun to decline significantly, indicating that some pharmacies have begun to take the initiative to reduce the scale.

In 2023, the net profit margins of Jointown, Yifeng Pharmacy, Dashenlin, and the common people will be 1.53%, 7%, 5.02%, and 5.01% respectively, of which the net profit margin of Jointown will decline most significantly compared with previous years.

(Jointown net profit margin, data source: Straight Flush website)

In the pharmacy industry, the current debt ratio is basically more than 60%, but the net profit margin is only a single-digit level.

Accounts receivable turnover continues to be at a new low

The stock price is at a new low

Even if the net profit margin is low, as long as it is not negative, it shows that there is still a profit margin in the pharmacy industry, and it will not lead to the large-scale closure of pharmacies.

However, as a special commodity, there are times when drugs cannot be sold, especially in these pharmacies that mainly rely on offline sales.

Or take Jointown, Yifeng Pharmacy, Dashenlin, and Laobaimin as examples, the common problem is that the accounts receivable turnover rate continues to hit a new low, and history shows that the stock price performance of pharmacies in the secondary market is highly correlated with the turnover rate of accounts receivable, which seems to explain why the stock price of pharmacy stocks has continued to fall in the past two years.

As of 2023, the turnover days of accounts receivable of Jointown will be 62.7 days, which is faster than the previous two years, Yifeng Pharmacy will be 31.73 days, a new high since listing, Dashenlin will be 16.39 days, a new high since listing, and 34.54 days for ordinary people, a new high since listing.

(Dashenlin accounts receivable days, data source: Straight Flush website)

Reflected in the stock price of the secondary market, in the past two years, the share price of Jointown rose by 15.69%, the maximum decline of 27.88% during the period, the share price of Yifeng Pharmacy rose by 10.37%, the maximum decline of 43.39% during the period, the share price of Dashenlin fell by 25.18%, the maximum decline of 62.93% during the period, the stock price of the common people fell by 5.35%, and the maximum decline of 50.21% during the period.

The stock price of Yixintang has fallen by 41.57% in the past two years, with the largest decline of 59.68% during the period.

(Screenshot of Yixintang's stock price trend)

Relatively speaking, the biggest slowdown in accounts receivable turnover in recent years is Dashenlin, whose accounts receivable turnover days were only 9.73 days three years ago, and will slow down to 16.39 days in 2023!

(Screenshot of Dashenlin's stock price trend)

In the context of high debt, low profits, and slowdown in accounts receivable turnover, the stock price of listed pharmacies in the secondary market has continued to fall sharply for a long time, which is actually only one aspect of the current pharmacy industry.

In this case, some pharmacies thought of selling at a low price, only to be boycotted by the pharmaceutical companies.

Therefore, another problem facing the pharmacy industry may be that the interest chain between pharmaceutical companies and pharmacies formed in the past ten years is facing a test. Pharmacies can only sell at a reduced price in order to survive, because drugs are also commodities and are also allocated by the supply and demand price mechanism, and pharmaceutical companies want to protect their own profits to resist pharmacies selling at reduced prices, or even out of stock, this imbalance should be broken, and it must be broken!

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