研究报告全文：MN30Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateDingdangHealth9886HKLong-termgrowthoutlookremainsintactTargetPriceHK765Better-than-expectedmarginimprovementin2022Dingdangreported2022PreviousTPHK1457revenueofRMB4329mnup177YoYdespitethenegativeimpactsfromUpDownside1020COVIDonnewstoreopeningsandsalesrestrictionsoffour-typemedicinesCurrentPriceHK379Adjustednon-IFRSnetlosswasRMB129mnsubstantiallynarrowedby609YoYindicatingcontinuouslyenhancedeconomiesofscaleRevenuemissedChinaHealthcareourforecastby53whileadjustednon-IFRSnetlosssignificantlybeatourJillWUCFAforecastby328LookingforwardweseeDingdangsrevenuegrowthto85239000842accelerateto233214205YoYin2023E24E25Econsideringthejillwucmbicomhkpost-pandemicbusinessresumptionandgrowingpenetrationofonlinemedicinepurchasinginChinaretailpharmacyWithcontinuouscostsavingsweforecastBenchenHUANGCFAhuangbenchencmbicomhkDingdangtobookadjustednetlossofRMB99mnin2023EandadjustednetprofitsofRMB33mnRMB86mnin2024E25EStockDataSolidbusinessdevelopmentamidunfavourablemacroenvironmentMktCapHKmn50842Avg3mthstoHKmn92DingdangcontinuedtoenjoythebiggrowthpotentialofChinadigitalretail52wHighLowHKNANApharmacymarketin2022byfurtherexecutingitsO2OstrategyTheTotalIssuedSharesmn13415Companyssmartpharmacynetworkhadbeenextendedtocover19majorSourceFactSetcitiesinChinaasoftheendof2022Additional70ofitspharmacieswereShareholdingStructureconnectedwithnationalmedicalsecurityontopofthe169ofitspharmaciesWenlongYang492withsuchaccessbyDec2021MoreoverDingdangprovidedover8mnChinaMerchantsBank71onlinehealthconsultationsin2022vs68mnin2021servingasacriticalSourceCompanytrafficconversionsourceforitsonlinedirectsalesBasdonitsenhancedSharePerformanceservicecapabilitiesthenumberofregisteredusersinitsself-ownedAbsoluteRelativeplatformincreasedfrom330mnin2021to375mnin20221-mth-508-5183-mth-674-682Expectrecoveryofbusinessin2023EStrictCOVIDcontrolmeasuresin6-mth-684-7322022hadnegativelyaffectedDingdangspaceofopeningnewstoresandSourceFactSetharmedthesaleoffour-typemedicinesForinstancesuchproductswere12-mthPricePerformancenotallowedtobesoldatpharmaciesorpatientsneededtogothroughstrictregistrationprocessbeforepurchaseWiththerestrictivemeasuresliftedaftertheCOVIDpandemicweexpecttheresumptionofsalesoffour-typemedicineswilllargelycontributetoDingdangsbusinessreboundin2023ConsistentmarginimprovementsDingdangmanagedtodelivercontinuousgrossprofitmarginGPMimprovementandoperationalcostsavingsin2022GPMimprovedby19pptin2022mainlydrivenbycost-SourceFactSetefficientcentralizedprocurementproductmixoptimizationandpilotchargingofdeliveryfeeincertainareasFulfilmentexpenseratiodecreasedby09pptto103inFY22WeestimatethatDingdanghasrealizedpositivenetmargininBeijingandreachedbreakeveninShenzhenShanghaiandGuangzhouDingdangalsoenjoyedefficientonlinetrafficcostswithsellingmarketingexpenseratioshrankby17pptto210inFY22ThereisstillplentyroomforprofitabilityimprovementdrivenbytheeconomiesofscaleinourviewMaintainBUYWecutourTPfromHK1457toHK765basedona10-yearDCFmodelWACC100terminalgrowth30reflectinglowerrevenueprojectionsfor2023E24EHoweverwemaintainBUYratingforDingdangtofactorinthesustainablebusinessrecoveryandmarginimprovementinthelongrunEarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn36794329533664777804YoYgrowth651177233214205AdjustednetprofitRMBmn329129993386EPSAdjustedRMBna015007002006PSxna10080706SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk30Mar2023Figure1EarningsrevisionNewOldDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue53366477780458747488na-917-1351naGrossProfit17342118257519092494na-917-1507naOperatingProfit-256-123-70-211-37nanmnmnaAdjustednetprofit-993386-9429nanm1500naAdjustedEPSRMB-007002006-007002nanm1500naGrossMargin32503270330032503330na000ppt-060pptnaOperatingMargin-480-190-090-360-050na-120ppt-140pptnaAdjustednetMargin-186051110-160038na-026ppt013pptnaSourceCompanydataCMBIGMestimatesFigure2Valuationonrisk-adjustedDCFvaluationDCFValuationinRMBmn2023E2024E2025E2026E2027E2028E2029E2030E2031E2032EEBIT2441115918128042964896614192058Taxrate00015151515151515EBIT1-taxrate2441115915423836555182112061749DA70605050505050505050-Changeinworkingcapital2617084120168231315422557-Capex50505050505050505050FCFF226162128691191973195067851193Terminalvalue17589Terminalgrowthrate30WACC100CostofEquity133CostofDebt45EquityBeta10RiskFreeRate28MarketRiskPremium105TargetDebttoAssetratio350EffectiveCorporateTaxRate150PVofterminalvalueRMBmn6791TotalPVRMBmn7781NetdebtRMBmn957MinorityinterestRMBmn10EquityvalueRMBmn8729EquityvalueHKmn10269ofsharesmn1341PricepershareHKpershare765SourceCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE230Mar2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnRevenue222936794329533664777804Costofgoodssold146225162879360243595229Grossprofit76611621450173421182575Operatingexpenses92818241776199022412646Sellingexpense72412471352153717622084Adminexpense121481335347356414RDexpense829689107123148Operatingprofit16166232625612370GainlossonfinancialassetsatFVTPL7559122505000ShareoflossesprofitsofassociatesJV000000NetInterestincomeexpense6188888Others21117282727Pre-taxprofit9011581283223610451Incometax191710000Aftertaxprofit9201598284223610451Minorityinterest5219444Netprofit9241577283323210047Adjustednetprofit149329129993386BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnCurrentassets109322682528206621832356Cashequivalents26115531211112010921098Accountreceivables18828044989108130Inventories323434608598724868FinancialassetsatFVTPL3210137137137137Othercurrentassets01123123123123Non-currentassets693678770760760770PPE46454272102132Right-of-useassets151169175140115100Intangibles230199170165160155Goodwill256256256256256256Othernon-currentassets810127127127127Totalassets178629463297282629433126Currentliabilities602739969597681778Accountpayables441587773401485582Othercurrentliabilities964875343434Leaseliabilities546172727272Contractliabilities516090909090Non-currentliabilities24904797129129129129Obligationsunderfinanceleases879691919191Othernon-currentliabilities2402470138383838Totalliabilities309155361098726810907Sharecapital5001111Capitalsurplus484228053805380538053Retainedearnings145730355869596459275837Totalshareholdersequity135826122186209021282217Minorityinterest5322141062Totalequityandliabilities178629463297282629433126PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE330Mar2023CASHFLOW2020A2021A2022E2023E2024E2025EYE31DecRMBmnOperatingProfitbeforetaxation9011582283223610451Depreciationamortization75135135706050Taxpaid162610000Changeinworkingcapital1165014826170Others76412272656128129naNetcashfromoperations193295199402558InvestingCapitalexpenditure202020205050Acquisitionofsubsidiariesinvestments20400000Others2623263562366Netcashfrominvesting486307377434444FinancingNetborrowings020000Proceedsfromshareissues8251395326000Others3012692888Netcashfromfinancing7951272234888NetchangeincashCashatthebeginningoftheyear1452611553121111201092Exchangedifference0100000Cashattheendoftheyear26115531211112010921098GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue747651177233214205Grossprofit630517247196221216Adjnetprofitnanananana1594PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin344316335325327330Operatingmargin7218075481909Adjnetprofitmargin678930190511ReturnonequityROEnanana1084722GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecNetdebttoequityxnana05050404Currentratiox183126353230Receivableturnoverdays616161616161Inventoryturnoverdays606606606606606606Payableturnoverdays406406406406406406VALUATION2020A2021A2022A2023E2024E2025EYE31DecPSnana10080706SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE430Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMoritsaffiliateshaveinvestmentbankingrelationshipwiththeissuerscoveredinthisreportinpreceding12monthsCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE5