研究报告全文：MN23Feb2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateDingdangHealth9886HK2022previewContinuingtoenhancelong-termgrowthlogicTargetPriceHK1457WeexpectDingdangtoexperiencerobustrevenuegrowthof24YoYinPreviousTPHK15732022EdespitethenegativeimpactsfromCOVIDonnewstoreopeningsandUpDownside588salesoffour-typemedicinesGoingforwardweseeDingdangsbusinessCurrentPriceHK918growthtoaccelerateto2927YoYin2023E24Ewithcontinuouscostsavingfromfulfilmentandadminexpensesconsideringthepost-pandemicChinaHealthcarebusinessresumptionandthegrowingpenetrationrateofonlinemedicineJillWUCFApurchasinginChinaretailpharmacyAccordinglyweforecastDingdangtobook85239000842adjustednetlossesofRMB192mnRMB94mnin2022E23EandadjustednetjillwucmbicomhkprofitsofRMB29mnin2024EBenchenHUANGCFACOVID-relatednegativitytophaseoutin2023ECOVIDcontrolhuangbenchencmbicomhkmeasuresin2022hadaffectednormalbusinesstravelingwhichiscriticaltoduediligencebeforeopeningnewofflinestoresoracquiringthird-partyStockDatastoresAsaresultweseeaslowdowninDingdangspaceofaddingnewMktCapHKmn115098Avg3mthstoHKmn117storestoitsnetworkin1H22duringwhichtheCompanygrewitstotalstore52wHighLowHKNANAnumberby8comparedwithanetadditionof100during2021WeexpectTotalIssuedSharesmn13415theCompanytolargelyresumeitsstoreopeningpacein2H22ESourceFactSetAdditionallythesalerestrictionsoffour-typemedicinesnamelycoldsShareholdingStructurefeverscoughrelievingandanti-inflammatorywerefurthertightenedsuchWenlongYang492asforbiddenofsalesandregistrationrequirementbeforepurchasinginChinaMerchantsBank712022whichposednegativeimpactsonthesalesofrelatedproductsWithSourceCompanythechangesofCOVIDcontrolpoliciesinChinabytheendof2022weSharePerformanceexpectthattherestrictionliftontravelingandthesalesoffour-typeAbsoluteRelativemedicineswilllargelycontributetoDingdangsbusinessrecoveryand1-mth-264-210growthin2023andbeyondMoreoverDingdanghasrecentlylaunched3-mth-270-373onlinestoresinDouyinaninnovativewaytoincreasepublicattentionand6-mthNMNMSourceFactSetdiversifytrafficacquisitionchannels12-mthPricePerformanceEyesonmarginimprovementsDespitethebusinessfluctuationscausedbyCOVIDoutbreaksin1H22DingdangmanagedtodelivercontinuousGPMimprovementandoperationalcostsavingsGPMincreasedby18pptsin1H22comparedwith2021whilefulfilmentmarketingandadminexpenseratiosdecreasedby061627pptsrespectivelyduringthesameperiodWiththegrowingeconomiesofscalesfurtheroptimizationofproductmixtherisingASPandhigherrelianceononlinemedicinepurchasingthereisstillroomforprofitabilityimprovementespeciallyonfulfilmentandadminSourceFactSetexpensesinourviewThesalerecoveryoffour-typemedicinesisalsolikelytobenefitGPMsinceOTC-typeofproductsgenerallypossesshigherGPMthanprescriptionmedicinesDingdanghaschargednodeliveryfeesononlineorderswhichotherwisewoulddirectlytransferintonetprofitsWeholdapositiveviewonDingdangsnear-termprofitabilityMaintainBUYOurTPofHK1457isbasedona10-yearDCFmodelWACC97terminalgrowthrate30toreflectDingdangsstrongcompetencyonO2Omedicinesalesanditslong-termgrowthprospectEarningsSummaryYE31DecFY20AFY21AFY22EFY23EFY24ERevenueRMBmn22293679457158747488YoYgrowth747651243285275NetprofitRMBmn924157882418411AdjustednetprofitRMBmn1493291929429EPSAdjustedRMBnana014007002PSx4527221713SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk23Feb2023Figure1EarningsrevisionNewOldDiffRMBmnFY22EFY23EFY24EFY22EFY23EFY24EFY22EFY23EFY24ERevenue457158747488457160577872000-302-487GrossProfit151719092494148020112653244-506-600OperatingProfit-425-211-37-411-254-49nmnmnmAdjustednetprofit-192-9429-178-13717nmnm6830AdjustedEPSRMB-014-007002-013-010001nmnm6830GrossMargin331832503330323933203370079ppt-070ppt-040pptOperatingMargin-930-360-050-899-419-062-031ppt059ppt012pptAdjustednetMargin-420-160038-389-226022-031ppt065ppt017pptSourceCompanydataCMBIGMestimatesFigure2Valuationonrisk-adjustedDCFvaluationDCFValuationinRMBmn2022E2023E2024E2025E2026E2027E2028E2029E2030E2031EEBIT841200262495728291186167223243184Taxrate00015151515151515EBIT1-taxrate841200262124867051008142119752706DA80706050505050505050-Changeinworkingcapital95657795109155218300408547-Capex50505050505050505050FCFF90624592117377549790112115672159Terminalvalue33310Terminalgrowthrate30WACC97CostofEquity120CostofDebt50EquityBeta08RiskFreeRate30MarketRiskPremium100TargetDebttoAssetratio300EffectiveCorporateTaxRate150TerminalvalueRMBmn13228TotalPVRMBmn15251NetdebtRMBmn1379MinorityinterestRMBmn12EquityvalueRMBmn16617EquityvalueHKmn19550ofsharesmn1341PricepershareHKpershare1457SourceCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE223Feb2023FinancialSummaryINCOMESTATEMENT2019A2020A2021A2022E2023E2024EYE31DecRMBmnRevenue127622293679457158747488Costofgoodssold80614622516305539654995Grossprofit4707661162151719092494Operatingexpenses5889281824194221212531Sellingexpense4787241247142117042082Adminexpense58121481413294300RDexpense528296108123150Operatingprofit11816166242521137GainlossonfinancialassetsatFVTPL15175591241200ShareoflossesprofitsofassociatesJV000000NetInterestincomeexpense6618999Others92111132726Pre-taxprofit266901158183419421Incometax81917000Aftertaxprofit274920159883419421Minorityinterest3521101010Netprofit277924157782418411Adjustednetprofit1231493291929429BALANCESHEET2019A2020A2021A2022E2023E2024EYE31DecRMBmnCurrentassets44510932268213621542300Cashequivalents1452611553153613771319Accountreceivables88188280100129164Inventories169323434499647816FinancialassetsatFVTPL433210000Othercurrentassets101111Non-currentassets309693678668668678PPE45464575105135Right-of-useassets1271511691299979Intangibles45230199199199199Goodwill86256256256256256Othernon-currentassets6810101010Totalassets75417862946280428232978Currentliabilities332602739529641768Accountpayables247441587377489616Othercurrentliabilities409648313131Leaseliabilities395461616161Contractliabilities265160606060Non-currentliabilities85924904797521052105210Obligationsunderfinanceleases808796969696Othernon-currentliabilities77924024701511451145114Totalliabilities119230915536573858515978Sharecapital50500000Capitalsurplus3448422422422422Retainedearnings53114573035336934533415Totalshareholdersequity44713582612294630312992Minorityinterest1053221228Totalequityandliabilities75417862946280428232978PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE323Feb2023CASHFLOW2019A2020A2021A2022E2023E2024EYE31DecRMBmnOperatingProfitbeforetaxation266901158283419421Depreciationamortization5775135807060Taxpaid71626000Changeinworkingcapital20211650956577Others15176412276069446Netcashfromoperations266193295244958InvestingCapitalexpenditure202020205050Acquisitionofsubsidiariesinvestments132040000Others442623263456Netcashfrominvesting11486307545556FinancingNetborrowings002000Proceedsfromshareissues400825139529000Others4630126999Netcashfromfinancing354795127228199NetchangeincashCashatthebeginningoftheyear46145261155315361377Exchangedifference0010000Cashattheendoftheyear1452611553153613771319GROWTH2019A2020A2021A2022E2023E2024EYE31DecRevenue1182747651243285275Grossprofit956630517305259306PROFITABILITY2019A2020A2021A2022E2023E2024EYE31DecGrossprofitmargin368344316332325333Operatingmargin9372180933605Adjnetprofitmargin976789421604GEARINGLIQUIDITYACTIVITIES2019A2020A2021A2022E2023E2024EYE31DecCurrentratiox131831403430Receivableturnoverdays506161808080Inventoryturnoverdays517606606596596596Payableturnoverdays326406406450450450VALUATION2019A2020A2021A2022E2023E2024EYE31DecSourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE423Feb2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE5