固生堂（2273.HK）2023年年报业绩点评 年度业绩贴前期预告上限，需求旺盛促持续高增 2024年03月29日 长 ➢ 事件：公司 2023 年实现收入 23.23 亿元（yoy+43%)，净利润 2.53 亿元 推荐 维持评级 (yoy+39.6%）；经调整净利润 3.05 亿元（yoy+53.6%)，整体业绩接近此前业 当前价格： 43.60港元 绩预告上限。净利润与经调整净利润差主要系股权激励费用导致，2023 年全年 股权激励费用5177.4万元。 ➢ 点评： [Table_Author] 1. 线上及线下业务拆分：公司线下业务收入达到 20.37 亿元（yoy+49.2%), 主要系需求端线下中医诊疗需求加速，供给端：公司自有医生成长、多点 医生不断开发带来线下业务加速成长；线上业务 2.86 亿元 （yoy+10.2%)，主要系2022年线上业务存在高基数效应影响； 2. 门店布局：2023年门店扩张符合年初指引。新进武汉、昆山2个新城，全 国新增门诊连锁9 家，截至2023年12月31日，公司在北京、上海、广 分析师 王班 州、深圳、佛山、中山、福州、南京、苏州、宁波、无锡、杭州、郑州、 执 ...

Investment Rating - The report maintains a "Buy" rating for the company [1][4] Core Insights - The company achieved a revenue of 2.33 billion yuan in 2023, representing a year-on-year growth of 43.05%, with a net profit of 252.20 million yuan, up 37.59% [3][4] - Adjusted net profit for 2023 was 304.71 million yuan, reflecting a significant increase of 53.60% [3] - The company experienced rapid growth in the second half of 2023, with revenue reaching 1.34 billion yuan, a 45% increase, and adjusted net profit of 203 million yuan, up 49% [3] - The company expanded its customer base significantly, adding 804,000 new customers, resulting in a total of 2.81 million customers by year-end, a 29.4% increase [3] - The company opened 9 new outpatient chain locations in 2023, including 7 through acquisitions and 2 through self-construction, entering two new cities [3] Financial Performance Summary - Total revenue for 2022 was 1.63 billion yuan, which increased to 2.33 billion yuan in 2023, with projections of 3.03 billion yuan for 2024 and 3.94 billion yuan for 2025 [2][4] - The company's gross profit margin for 2023 was 30.1%, slightly down by 0.6 percentage points from the previous year [3] - The return on equity (ROE) for 2023 was 12.53%, an increase of 1.32 percentage points [3] - The earnings per share (EPS) for 2023 was 1.02 yuan, with projections of 1.44 yuan for 2024 and 1.95 yuan for 2025 [2][4] Market Data - The closing price of the company's stock was 43.60 HKD, with a market capitalization of approximately 10.75 billion HKD [6] - The price-to-earnings (P/E) ratio based on the latest diluted EPS is 38.66 for 2023, projected to decrease to 27.43 for 2024 and 20.32 for 2025 [2][4]

业绩简评 2024 年 3月 27 日，公司发布 23 年年度业绩公告。公司2023年实 现收入 23.23 亿元（同比+43%），经调整净利润 3.05 亿元（同比 +54%），归母净利润 2.52 亿元（同比+39%）； 拆分来看，2023H2 公司实现收入13.37 亿元（同比+45%），经调整 净利润2.03 亿元（+49%），归母净利润1.59 亿元（同比+25%）。 经营分析 线下收入高增，线上收入稳定。2023 年，公司线下医疗机构收入 20.37 亿元(同比+49%)，线上医疗健康平台收入 2.86 亿元(同比 +10%)。线下医疗机构收入高增，主要来自公司新收购及现有线下 业务的双重驱动。客户方面，2023 年公司客户就诊人次为 429.7 万人次(同比+46%)，就诊次均消费541 元(同比-2%)，客户回头率 港币(元) 成交金额(百万元) 为 65.2%（同比+1.2pct），新客户 80.4 万人(同比+46%)。公司客 63.00 500 450 户群稳定增长且客户回头率进一步提升，为业绩增长奠定基础。 59.00 400 55.00 350 门店数量持续扩张，业务区域不断拓展。截 ...

公 司 2024年03月 28日 报 固生堂(2273.HK) 告 公司稳步扩张，患者数量快速增长带来业绩高增速 强烈推荐（维持） 事项： 公司发布 2023年年报，2023年实现收入23.23亿元（+43.0%，2022年收入 股价：46.2 港元 经过追述调整为 16.25 亿元）；扣非净利润2.53 亿元（+39.6%，2022 年利润 经过追述调整为1.81亿元）；经调整净利润3.05亿元（+53.6%）。公司业绩略 公 主要数据 超预期。 司 董事会已决议不派发截至2023年12月31日止财政年度的末期股息。 行业 医药生物 平安观点： 年 公司网址 www.gstzy.cn 大股东/持股 11.14%  患者数量快速增长推动公司业绩增长：2023 年，公司就诊人次达到 430 报 实际控制人 涂志亮 万（+46%），新客户达80万（+45%），均实现稳定增长。公司就诊人次 点 总股本(百万股) 246.59 数的提升，除现有门店的增长外，新门店亦起到重要作用。公司患者体验 流通A股(百万股) 0 评 流通B/H股(百万股) 246.59 良好，回头率稳定提升至 65.2%，同比增长 1.22 个 ...

Financial Performance - The group's revenue increased by 43.0% from RMB 1,624.6 million for the year ended December 31, 2022, to RMB 2,323.4 million for the year ended December 31, 2023[2]. - Gross profit rose by 40.1% from RMB 499.5 million in 2022 to RMB 700.0 million in 2023[2]. - Net profit increased by 39.6% from RMB 181.2 million in 2022 to RMB 252.9 million in 2023[2]. - Adjusted net profit grew from RMB 198.4 million in 2022 to RMB 304.7 million in 2023[2]. - Total comprehensive income for the year was RMB 257.9 million, compared to RMB 172.9 million in the previous year[3]. - The company reported a basic earnings per share of RMB 1.06 for the year, up from RMB 0.79 in 2022[6]. - The net profit for the year 2023 was RMB 9,029 thousand, compared to a loss of RMB 2,398 thousand in 2022, indicating a significant turnaround[19]. - Basic earnings per share for 2023 were RMB 0.04, up from a loss of RMB 0.01 per share in 2022[20]. - The net profit attributable to equity holders of the parent company was RMB 252,202,000, compared to RMB 180,854,000 in 2022[40]. - Total revenue for 2023 was RMB 2,323,351 thousand, an increase from RMB 1,624,561 thousand in 2022, representing a growth of approximately 43%[24]. Assets and Liabilities - The company's cash and cash equivalents amounted to RMB 1,301.3 million as of December 31, 2023, up from RMB 994.3 million in 2022[7]. - Current assets increased to RMB 1,837.6 million in 2023 from RMB 1,359.6 million in 2022[7]. - Total assets less current liabilities reached RMB 2,671.1 million, compared to RMB 2,063.9 million in 2022[8]. - Non-current assets totaled RMB 1,541.7 million as of December 31, 2023, compared to RMB 1,258.6 million in 2022[7]. - The total liabilities decreased to RMB 1,506 thousand in 2023 from RMB 8,757 thousand in 2022, a reduction of approximately 83%[18]. - Deferred tax liabilities were RMB 1,506 thousand in 2023, down from RMB 8,757 thousand in 2022, reflecting a decrease of approximately 83%[18]. - The debt-to-equity ratio as of December 31, 2023, was 0.7%[89]. Revenue Sources - Revenue from medical health solutions and product sales was RMB 2,287,100 thousand and RMB 36,251 thousand respectively in 2023, compared to RMB 1,595,717 thousand and RMB 28,844 thousand in 2022[25]. - Revenue from offline medical institutions surged by 49.2% from RMB 1,364.9 million in 2022 to RMB 2,037.1 million in 2023, driven by business growth from newly acquired and existing institutions[71]. - Revenue from the online medical health platform grew by 10.2% from RMB 259.6 million in 2022 to RMB 286.2 million in 2023, due to an increase in patient visits[71]. - Revenue from the sale of medical health products increased by 25.7% from RMB 28.8 million in 2022 to RMB 36.3 million in 2023, mainly due to sales growth from new customers[69]. Customer Growth and Engagement - The company achieved a total of 803,973 new customers in the year ended December 31, 2023, compared to 551,999 in the previous year, reflecting a significant increase of 45.5%[60]. - Cumulative customers reached 3,536,797 by December 31, 2023, up from 2,732,824 in 2022, representing a growth of 29.4%[60]. - The total number of customer visits increased to 4,297,000 in 2023 from 2,945,000 in 2022, marking a rise of 46%[60]. - The customer retention rate improved to 65.2% in 2023 from 64.0% in 2022, indicating effective customer acquisition and retention strategies[60]. Operational Efficiency and Investments - The company has established a digital store system for offline medical institutions to enhance customer interaction and improve service efficiency[53]. - The integration of traditional Chinese medicine and Western medicine aims to provide comprehensive healthcare solutions, particularly in chronic disease management[52]. - The company has implemented a customer relationship management (CRM) system to enhance operational efficiency of the medical professional team[53]. - The establishment of an enterprise resource planning (ERP) system aims to enhance digital operations and management across supply chain, sales, inventory, and accounting[53]. - The company is increasing its investment in research and development to standardize and productize medical health solutions, with plans for more in-house preparations in the future[66]. Corporate Governance and Compliance - The company is committed to maintaining high levels of corporate governance and has complied with all applicable code provisions, except for the separation of the roles of Chairman and CEO[103]. - The company has established an audit committee to assist the board in reviewing compliance, accounting policies, and financial reporting procedures[110]. - The independent auditor has reviewed the preliminary performance announcement, but this does not constitute a certification under Hong Kong auditing standards[111]. - The company is committed to maintaining compliance with the listing rules as outlined in Appendix C3[117]. Future Plans and Strategies - The company plans to apply newly issued but not yet effective Hong Kong Financial Reporting Standards, which may lead to changes in accounting policies but are not expected to significantly impact operational performance[21]. - The company aims to enhance its R&D capabilities, including in-house formulations, with a budget of HKD 74.8 million, of which HKD 44.3 million has been utilized[98]. - The company plans to allocate 60% of the net proceeds (approximately HKD 323.77 million) to expand offline medical institutions by the end of 2027[101]. - The company aims to strengthen its OMO platform and brand value while addressing healthcare accessibility issues for customers[64]. - The company is actively exploring opportunities for mergers and acquisitions to drive growth[117].

证券研究报告 | 公司动态点评 2024 年 02月 21日 固生堂（02273.HK） 业绩增长势头强劲，持续回购彰显长期发展信心 财务指标 2021A 2022A 2023E 2024E 2025E 买入（维持评级） 营业收入（百万元） 1372 1625 2309 3025 3948 股票信息 增长率yoy（%） 48.3 18.4 42.1 31.0 30.5 归母净利润（百万元） -507.1 183.3 250.1 345.2 500.2 行业 医药 增长率yoy（%） -98.3 136.1 36.5 38.0 44.9 2024年2月21日收盘价（港元） 44.200 经调整净利润（百万元） 157 198 300 405 545 总市值（百万港元） 10,899.24 增长率yoy（%） 85.0 26.6 51.2 35.0 34.6 流通市值（百万港元） 10,899.24 ROE（%） -32.7 10.7 12.7 14.9 17.8 总股本（百万股） 246.59 EPS最新摊薄（元） -2.06 0.74 1.01 1.40 2.03 流通股本（百万股） 246.59 P/E（倍 ...

Financial Performance - Revenue for the first half of 2023 reached RMB 986,126 thousand, representing a 40.3% increase from RMB 702,902 thousand in the same period of 2022[7] - Gross profit increased to RMB 282,945 thousand, a rise of 42.3% compared to RMB 198,895 thousand in the previous year[7] - Profit before tax surged by 100.8% to RMB 106,990 thousand, up from RMB 53,290 thousand in the same period last year[7] - Net profit rose to RMB 93,202 thousand, marking a 74.0% increase from RMB 53,577 thousand in the prior year[7] - Adjusted net profit increased by 63.8% to RMB 101,759 thousand, compared to RMB 62,134 thousand in the same period of 2022[7] - Basic earnings per share rose to RMB 0.39, a 69.6% increase from RMB 0.23 in the previous year[7] Customer Growth and Engagement - The total number of new customers increased to 346,679 for the six months ended June 30, 2023, compared to 246,325 in the same period of 2022, representing a growth of 40.7%[17] - Cumulative customers reached 3,079,503 as of June 30, 2023, up from 2,427,150 a year earlier, indicating a year-over-year increase of 27%[17] - The total number of customer visits increased to 1,806,000 for the six months ended June 30, 2023, compared to 1,323,000 in the same period of 2022, reflecting a growth of 36.4%[17] - Membership numbers for customers who made purchases increased to 174,734 as of June 30, 2023, from 99,201 in the same period of 2022, showing a growth of 76%[19] - The member visit rate was 621,000 for the six months ended June 30, 2023, compared to 366,000 in the same period of 2022, indicating a growth of 69.5%[19] - The customer retention rate improved slightly to 67.3% for the six months ended June 30, 2023, compared to 66.9% in the same period of 2022[17] Operational Strategies and Digitalization - The company has integrated offline medical institutions with online health platforms to enhance service delivery and customer reach[10] - Digitalization efforts include the establishment of a digital staff system at offline medical institutions to improve customer interaction and operational efficiency[11] - The company established a CRM system to enhance operational efficiency for medical professional teams through digital analysis[12] - An intelligent compliance platform was developed to integrate national medical insurance reimbursement logic and local regulations, improving compliance control[12] - The company implemented an ERP system for comprehensive management of supply chain, sales, inventory, and accounting, further enhancing management efficiency[12] Expansion and Market Position - As of June 30, 2023, the company operated 53 medical institutions across major cities in China, including Beijing, Shanghai, and Guangzhou[16] - The company acquired 100% equity of three medical institutions in March and April 2023, expanding its service network in East and Central China[16] - The company plans to leverage favorable government policies to enhance growth in the traditional Chinese medicine sector[16] - The company aims to combine traditional Chinese medicine with Western medical practices to provide comprehensive healthcare solutions[11] Government Policies and Industry Support - The Chinese government introduced policies to support the development of traditional Chinese medicine (TCM), ensuring operational security for the company's business[12] - The "14th Five-Year" plan aims to increase the number of TCM practitioners from 0.49 per 1,000 people in 2020 to 0.62 by 2025, enhancing resource availability for the company[13] - The plan also targets a 100% coverage rate of county-level TCM medical institutions by 2025, promoting the company's business model[13] - Policies to address the shortage of TCM talent are being implemented, which will benefit the company's operations at the grassroots level[13] - The "Internet + TCM health services" initiative is being promoted, integrating new technologies into traditional services, providing long-term policy support for the company's operations[13] Financial Position and Investments - Cash and cash equivalents amounted to RMB 1,275.0 million as of June 30, 2023, compared to RMB 994.3 million as of December 31, 2022[44] - Capital expenditures totaled RMB 29.9 million for the reporting period, an increase from RMB 17.5 million for the same period in 2022, mainly due to increased spending on offline medical institutions and office equipment[46] - The company's total issued share capital as of June 30, 2023, was USD 24,079.6458, with a total of 240,796,458 shares issued[44] - The debt-to-equity ratio as of June 30, 2023, was 1.1%[45] - The company reported a total equity of RMB 2,284,159 thousand, reflecting a strong financial position[88] Shareholder and Governance Structure - The company maintains a high level of corporate governance, having adopted the corporate governance code as per the listing rules[52] - The audit committee has reviewed the unaudited interim results for the six months ended June 30, 2023, ensuring compliance with relevant accounting standards[55] - The company has established a governance structure with sufficient checks and balances, despite the chairman also serving as the CEO[52] - The company’s major shareholder, Tu, holds approximately 12.48% of the issued shares through controlled entities[65] Research and Development - The company is committed to increasing R&D investment to standardize and productize healthcare solutions, with plans for more in-house preparations[22] - The company plans to enhance R&D capabilities, including the development of in-hospital formulations and TCM solution packages, with an allocation of 9.6% of the net proceeds[57] Risks and Challenges - Risk management and internal controls will be enhanced to ensure stable growth amid rapid expansion and rising material costs[22] - The company incurred financing costs of RMB 15,914,000 in the first half of 2023, compared to RMB 8,715,000 in the same period of 2022, representing an increase of 82.5%[92]

Financial Performance - The group's revenue increased by 40.3% from RMB 702.9 million for the six months ended June 30, 2022, to RMB 986.1 million for the six months ended June 30, 2023[2]. - Net profit rose to RMB 93.2 million, up 74.0% from RMB 53.6 million for the same period in 2022[2]. - Adjusted net profit increased by 63.8% to RMB 101.8 million from RMB 62.1 million in the previous year[2]. - Gross profit for the period was RMB 282.9 million, compared to RMB 198.9 million in the prior year[3]. - Total comprehensive income for the period was RMB 99.7 million, significantly up from RMB 31.0 million in the same period last year[4]. - Basic earnings per share rose to RMB 0.39 from RMB 0.23 in the previous year[4]. - The group reported a profit attributable to equity holders of the parent of RMB 92,749,000 for the six months ended June 30, 2023, compared to RMB 53,289,000 in the same period of 2022, representing a growth of 74.0%[22]. - Basic earnings per share for the period were RMB 0.394, compared to RMB 0.231 for the same period last year, indicating a 70.8% increase[21]. - Other income surged by 218.2% from RMB 11.6 million to RMB 36.9 million, driven by foreign exchange gains and increased government subsidies[57]. - The company's total revenue increased by 40.3% from RMB 702.9 million for the six months ended June 30, 2022, to RMB 986.1 million for the six months ended June 30, 2023[46]. Revenue Breakdown - Revenue from healthcare solutions was RMB 965,311,000, up 40.4% from RMB 687,507,000 year-on-year[13]. - Revenue from providing healthcare solutions rose by 40.4% from RMB 687.5 million to RMB 965.3 million during the same period, driven by increased income from newly acquired and existing offline medical institutions[47]. - Revenue from the sale of healthcare products increased by 35.2% from RMB 15.4 million to RMB 20.8 million, primarily due to higher sales through offline channels[48]. - Revenue from offline medical institutions grew by 47.3% from RMB 581.4 million to RMB 856.4 million, attributed to business growth from new acquisitions and existing institutions[50]. - Revenue from the online healthcare platform increased by 6.8% from RMB 121.5 million to RMB 129.7 million, mainly due to an increase in patient visits[50]. Cost and Expenses - The cost of providing healthcare solutions increased to RMB 687,606,000, compared to RMB 495,124,000 in the previous year, reflecting a rise of 38.9%[16]. - The company's cost of sales rose by 39.5% from RMB 504.0 million to RMB 703.2 million, primarily due to rising physician and material costs[51]. - Physician and material costs accounted for 79.3% of total sales costs, increasing by 43.2% year-on-year[52]. - Sales and distribution expenses increased by 31.7% from RMB 91.3 million to RMB 120.2 million, primarily due to higher regional operating expenses[58][59]. - Administrative expenses rose by 36.0% from RMB 51.3 million to RMB 69.8 million, attributed to increased employee benefits and office expenses[60]. - Financing costs increased by 82.6% from RMB 8.7 million to RMB 15.9 million, mainly due to higher interest rates on other borrowings[62]. Assets and Liabilities - The company's cash and cash equivalents increased to RMB 1,274.99 million from RMB 994.33 million as of December 31, 2022[5]. - Non-current assets totaled RMB 1,397.53 million, up from RMB 1,258.65 million at the end of 2022[5]. - The company's equity attributable to owners increased to RMB 2,284.16 million from RMB 1,718.01 million[6]. - Trade receivables as of June 30, 2023, totaled RMB 115,739 thousand, up 29.5% from RMB 89,411 thousand at the end of 2022[24]. - Trade payables and notes payable stood at RMB 163,129 thousand as of June 30, 2023, slightly down from RMB 164,305 thousand at the end of 2022[27]. - The company has no contingent liabilities as of June 30, 2023[69]. - The debt-to-equity ratio as of June 30, 2023, was 1.1%[70]. Customer Metrics - New customer acquisition reached 346,679 for the six months ended June 30, 2023, compared to 246,325 in the same period of 2022, representing an increase of approximately 40.7%[37]. - Cumulative customers as of June 30, 2023, totaled 3,079,503, up from 2,427,150 in the same period of 2022, indicating a growth of about 27%[37]. - The number of customer visits increased to 1,806,000 for the six months ended June 30, 2023, from 1,323,000 in the same period of 2022, reflecting a growth of approximately 36.4%[37]. - The average spending per visit increased to RMB 546 for the six months ended June 30, 2023, compared to RMB 531 in the same period of 2022[37]. - Membership program participation grew significantly, with 174,734 members making purchases in the medical service network as of June 30, 2023, compared to 99,201 in the same period of 2022[40]. - Customer retention rate improved slightly to 67.3% for the six months ended June 30, 2023, compared to 66.9% in the same period of 2022[37]. Strategic Initiatives - The company has integrated offline medical institutions with online health platforms, enhancing customer reach and resource allocation[29]. - The company has developed a standardized and digitalized operation model, including a digital staff system and a customer relationship management (CRM) system to improve operational efficiency[31]. - The company aims to combine traditional Chinese medicine with Western medicine to provide comprehensive healthcare solutions, particularly for chronic disease management[30]. - The company is positioned to benefit from favorable government policies encouraging the development of online healthcare services[29]. - The company has established an intelligent compliance platform to ensure adherence to national medical insurance reimbursement policies[31]. - The company plans to enhance its digital capabilities and introduce smart hardware to improve remote TCM services, aiming for broader customer reach[45]. - The company is focusing on increasing R&D investment to standardize and productize healthcare solutions, with significant progress in internal TCM formulations[45]. - The company is implementing a strategic reserve mechanism for medicinal materials to mitigate risks associated with rising raw material prices and supply shortages[45]. Government and Regulatory Environment - The National Medical Insurance Administration and the National Administration of Traditional Chinese Medicine issued guidelines to support the development of traditional Chinese medicine (TCM), including integrating TCM into medical insurance plans and allowing a markup of no more than 25% on the sale of medicinal pieces[32]. - By 2025, the number of TCM practitioners per 1,000 population is expected to increase from 0.49 in 2020 to 0.62, and the coverage rate of county-level TCM medical institutions is projected to rise from 85.86% in 2020 to 100%[32]. - The State Council's 2022 key tasks aim to promote the integration of outpatient services into the insurance fund, which is expected to lead to rapid growth in outpatient services in China[33]. - The National Administration of Traditional Chinese Medicine's plan to enhance TCM talent development includes expanding the scale and improving the quality of TCM professionals, which will help address the shortage of doctors in grassroots healthcare[33]. - The implementation plan for major projects to revitalize TCM aims to enhance the capabilities of grassroots medical institutions and cultivate high-quality TCM talent, aligning with national policies to promote TCM development[34]. - The "14th Five-Year" plan for TCM culture promotion includes increased funding and encourages collaboration between government and private sectors to support TCM cultural initiatives, which may provide growth opportunities for the company[34]. Employee and Governance - The total employee cost for the six months ended June 30, 2023, was approximately RMB 166.9 million, compared to RMB 119.6 million for the same period in 2022[80]. - The company employed 2,155 staff as of June 30, 2023, an increase from 1,805 employees as of June 30, 2022[80]. - The employee distribution includes 52% in medical professionals, 24% in management and operations, 17% in sales and marketing, 5% in supply chain, and 2% in IT and R&D[81]. - The company has maintained good relations with employees, with no strikes or significant labor disputes reported during the reporting period[82]. - The board believes that the current management structure is effective and has established sufficient checks and balances, despite deviations from certain corporate governance codes[84]. - The company has adopted a code of conduct for securities trading in compliance with the listing rules[85]. - The audit committee consists of two independent non-executive directors and one non-executive director, responsible for reviewing compliance and financial reporting procedures[88]. Shareholder and Market Activities - The company completed the placement of 10,400,000 shares at a price of HKD 52.67 per share, raising a total of approximately HKD 539.61 million[77]. - The net proceeds from the placement are allocated as follows: HKD 323.77 million (60%) for expanding offline medical institutions, HKD 107.92 million (20%) for upgrading and integrating the online healthcare platform, and HKD 107.92 million (20%) for enriching the product portfolio and improving IT systems[79]. - The company has established a framework for issuing new shares through various incentive plans, including stock option plans[97]. - The maximum number of shares available for future grants under the share option plan is 19,867,845 shares[90]. - The maximum number of shares available for future grants under the restricted share incentive plan (existing shares) is 11,427,322 shares[90]. Compliance and Reporting - The audit committee has reviewed the unaudited interim results for the six months ended June 30, 2023, confirming compliance with relevant accounting standards and regulations[89]. - The interim results announcement and report will be published on the Stock Exchange and the company's website[91]. - No significant events that may affect the group have occurred after the reporting period[90]. - The reporting period covers six months from January 1, 2023, to June 30, 2023[95].

Financial Performance - Revenue for 2022 reached RMB 1,624.6 million, an increase of 18.4% compared to RMB 1,372.1 million in 2021[7] - Adjusted net profit for 2022 was RMB 200.8 million, reflecting a growth of 28.1% from RMB 156.7 million in 2021[7] - The company reported a net profit of RMB 183.6 million for the year ended December 31, 2022, compared to a net loss of RMB 506.9 million for the year ended December 31, 2021, primarily due to revenue growth from existing offline medical institutions and online health platforms[102] - The company achieved a customer retention rate of 64.0% in 2022, up from 62.8% in 2021[54] - The gross profit margin decreased to 30.8% in 2022 from 45.2% in 2021, a decline of 14.4%[7] - The net profit margin improved to 11.3% in 2022 from a loss of 36.9% in 2021, an increase of 48.2%[7] - The gross profit from healthcare solutions rose by 20.0% from RMB 607.4 million in 2021 to RMB 729.0 million in 2022, aligning with overall revenue growth in this segment[88] - Revenue from healthcare solutions accounted for 98.2% of total revenue in 2022, amounting to RMB 1,595.7 million, up 18.8% year-over-year[68] User Engagement and Growth - The company served nearly 13 million cumulative users, with over 2.9 million service users in 2022, solidifying its position as a leader in primary TCM service providers in China[11] - Membership numbers increased to 203,108 in 2022 from 138,328 in 2021, indicating a growth of approximately 46.8%[57] - Cumulative customers reached 2,732,824 by the end of 2022, compared to 2,180,825 in 2021, reflecting a year-over-year increase of about 25.3%[54] - Customer visits totaled 2,945,000 in 2022, an increase from 2,673,000 in 2021, representing a growth of approximately 10.1%[54] - User retention rate reached 64.0% in 2022, with membership numbers at 203,108 and an annual retention rate of approximately 86.4%[13] Operational Developments - The company operates 48 offline medical institutions covering 14 cities, providing high-quality TCM services through a standardized and branded model[19] - The company has established a drug assurance mechanism, ensuring high-quality TCM materials through expert evaluations[12] - The offline consumption ratio of member users was approximately 40%, with member users generating nearly double the revenue of non-member users[13] - The company has integrated offline medical institutions with online health platforms, enhancing customer reach and long-term health management, which has been supported by favorable government policies[38] Strategic Initiatives - Strategic partnerships established with multiple top-tier hospitals to build innovative medical alliances, improving resource allocation in TCM[20] - A three-tier talent cultivation system has been developed, focusing on academic leaders, core doctors, and young graduates to enhance TCM expertise[21] - The company aims to enhance user experience through refined services and long-term relationships with patients[12] - Future plans include developing OMO (Online-Merge-Offline) services to connect internet diagnosis with medical insurance, allowing patients to access services anytime, anywhere[32] Research and Development - Increased R&D investment is planned to establish a product system for common prescriptions and treatment pathways for the top five diseases[32] - The company launched its first in-house traditional Chinese medicine formulation, Tongqiao Zhi Ti Bi Shu Granules, which received regulatory approval in December 2022[54] - The company has completed trial production of several in-house formulations for conditions such as hair loss and digestive symptoms, with plans to apply for regulatory approval[67] Digital Transformation - The company invested heavily in digital operations and compliance management in 2022, enhancing user service and operational efficiency through refined management committees[28] - The company plans to enhance its digital capabilities and introduce smart hardware to improve remote TCM services, aiming for broader customer reach[63] - The company has developed a digital store system for offline medical institutions, improving customer interaction and experience, which has led to increased patient visits and retention rates[44] Government and Policy Support - The Chinese government has introduced policies to support the development of TCM, including the integration of TCM services into medical insurance, which is expected to boost the company's business operations[43] - The "14th Five-Year" plan aims to increase the number of TCM practitioners from 0.49 per 1,000 people in 2020 to 0.62 by 2025, enhancing the supply of TCM resources[45] - The coverage rate of county-level TCM medical institutions is projected to increase from 85.86% in 2020 to 100% by 2025, which will benefit the company's expansion efforts[45] Financial Management - Cash and cash equivalents amounted to RMB 994.3 million as of December 31, 2022, down from RMB 1,030.7 million as of December 31, 2021[108] - The company's debt-to-equity ratio was 4.1% as of December 31, 2022, down from 5.4% as of December 31, 2021[114] - The effective tax expense for 2022 was RMB 15.2 million, compared to a tax credit of RMB 11.1 million in 2021, reflecting increased taxable profits[101] Management and Governance - The company has a diverse board with members having extensive backgrounds in finance, investment, and management, enhancing strategic decision-making capabilities[145] - The company is committed to maintaining high standards of governance and oversight through its experienced board members[145] - The company has appointed independent directors to ensure unbiased opinions and judgments in its operations[149]

Financial Performance - The company's revenue increased by 18.4% to RMB 1,624.6 million for the year ended December 31, 2022, compared to RMB 1,372.1 million for the year ended December 31, 2021[2]. - The net profit for the year ended December 31, 2022, was RMB 183.6 million, a significant recovery from a net loss of RMB 506.9 million in the previous year[2]. - Adjusted net profit rose to RMB 200.8 million for the year ended December 31, 2022, up from RMB 156.7 million in the previous year, representing an increase of 28.1%[2]. - Gross profit for the year ended December 31, 2022, was RMB 499.5 million, down from RMB 620.3 million in the previous year[3]. - The total comprehensive income for the year ended December 31, 2022, was RMB 175.3 million, compared to a loss of RMB 469.9 million in the previous year[5]. - Basic earnings per share for the year ended December 31, 2022, was RMB 0.80, recovering from a loss of RMB 4.38 in the previous year[6]. - The company's pre-tax profit for the reporting period was RMB 273,188 thousand, compared to RMB 343,048 thousand in the previous year, indicating a decline[26]. - The total income tax expense for the year was RMB 15,158 thousand, an increase from RMB 11,136 thousand in the previous year[31]. - The basic earnings per share for the year was RMB 0.796, compared to a loss of RMB 4.375 in the previous year, reflecting a significant turnaround[34]. - The company's total revenue increased by 18.4% from RMB 1,372.1 million in 2021 to RMB 1,624.6 million in 2022, primarily driven by the growth in healthcare solutions revenue[59]. Assets and Liabilities - The company's total assets as of December 31, 2022, amounted to RMB 3,418.9 million, an increase from RMB 3,167.5 million as of December 31, 2021[7]. - Non-current assets increased to RMB 1,254.0 million as of December 31, 2022, from RMB 1,094.9 million in the previous year[7]. - The company's total equity as of December 31, 2022, was RMB 1,722.1 million, up from RMB 1,549.4 million in the previous year[8]. - Cash and cash equivalents totaled RMB 994,330 thousand, a slight decrease from RMB 1,030,704 thousand in the previous year[38]. - The company's bank loans amounted to RMB 18,936,000 (2022) compared to RMB 28,525,000 (2021), reflecting a decrease of approximately 33.9%[41]. - Other borrowings increased to RMB 52,235,000 in 2022 from RMB 55,788,000 in 2021, indicating a decrease of about 6.4%[41]. - The company's debt-to-equity ratio was 4.1%, down from 5.4% as of December 31, 2021[88]. - Total interest-bearing bank and other borrowings amounted to RMB 71.2 million as of December 31, 2022, compared to RMB 84.3 million as of December 31, 2021[86]. Revenue Sources - Revenue from healthcare solutions was RMB 1,595,717 thousand, while sales of healthcare products amounted to RMB 28,844 thousand in 2022[19]. - Revenue from the national medical insurance reimbursement scheme accounted for 28.8% of total revenue in 2022, up from 27.8% in 2021, due to more offline medical institutions qualifying for reimbursement[64]. - Revenue from offline medical institutions increased by 12.0% from RMB 1,218.9 million in 2021 to RMB 1,364.9 million in 2022, consistent with the growth of newly acquired and existing institutions[66]. - Revenue from the online healthcare platform surged by 69.5% from RMB 153.2 million in 2021 to RMB 259.6 million in 2022, driven by increased customer visits and growth in specific geographic regions[66]. Expenses and Costs - The cost of providing healthcare solutions was RMB 1,107,644 thousand in 2022, up from RMB 735,635 thousand in 2021[25]. - The company's cost of sales rose by 49.6% from RMB 751.8 million in 2021 to RMB 1,125.0 million in 2022, primarily due to increased physician costs and operational expenses[67]. - The company's sales cost increased by 17.6% from RMB 751.8 million in 2021 to RMB 884.1 million in 2022, primarily due to the expansion of the physician group and increased material costs[68]. - Gross profit decreased by 19.5% from RMB 620.3 million in 2021 to RMB 499.5 million in 2022, mainly due to a significant increase in sales costs following the restructuring of offline medical institutions[70]. - Administrative expenses decreased by 59.6% from RMB 248.0 million for the year ended December 31, 2021, to RMB 100.2 million for the year ended December 31, 2022[77]. - Other expenses reduced by 81.3% from RMB 52.2 million for the year ended December 31, 2021, to RMB 9.8 million for the year ended December 31, 2022[79]. - Financing costs decreased by 38.0% from RMB 28.4 million for the year ended December 31, 2021, to RMB 17.6 million for the year ended December 31, 2022[80]. Customer Acquisition and Retention - The company reported a total of 551,999 new customers in the year ended December 31, 2022, compared to 526,820 in 2021, indicating effective customer acquisition strategies[51]. - The cumulative number of customers reached 2,732,824 by the end of 2022, up from 2,180,825 in 2021, reflecting a growth of approximately 25.3%[51]. - Customer visit frequency increased, with 2,945 thousand visits recorded in 2022, compared to 2,673 thousand in 2021, representing a growth of about 10.1%[51]. - The customer retention rate improved to 64.0% in 2022 from 62.8% in 2021, demonstrating effective customer retention strategies[51]. - The member retention rate was 86.4% in 2022, slightly down from 87.3% in 2021[53]. Strategic Initiatives and Future Plans - The company aims to combine traditional Chinese medicine with Western medical practices, focusing on chronic disease management and long-term health monitoring[45]. - The company plans to enhance its OMO platform and brand value while attracting quality medical resources to address the challenges of access and affordability in healthcare services[56]. - Future strategies include increasing R&D investment for productization and standardization of medical health solutions, with several in-house formulations already in trial production[57]. - The company aims to leverage digitalization and "Internet+" initiatives to enhance remote medical services and improve customer retention and average revenue per user[57]. - The company has established partnerships with 13 third-party online platforms to enhance online appointment services, expanding its digital reach[49]. Regulatory and Compliance - The company has adopted revised Hong Kong Financial Reporting Standards, which did not impact its financial position or performance for the year[13]. - The revised standards clarify the assessment of whether a contract is loss-making, including direct costs related to contract fulfillment[14]. - The company has not identified any loss contracts under the revised standards, indicating stable contract performance[14]. - The audit committee has reviewed the accounting practices and policies adopted by the group for the year ending December 31, 2022[103]. Miscellaneous - The company did not recommend any dividend payments for the years ended December 31, 2022, and 2021[32]. - The company has not experienced any strikes or significant labor disputes during the reporting period[94]. - No major litigation or arbitration involving the company or its subsidiaries as of the announcement date[100].