Investment Rating - Buy (Maintained Rating) [2] Core Views - The company reported strong 1H24 results with revenue of RMB 1.365 billion (+38% YoY) and adjusted net profit of RMB 148 million (+45% YoY) [2] - The company is a leader in traditional Chinese medicine (TCM) healthcare services, with significant growth potential driven by its expanding network and economies of scale [4] - The company's offline medical services saw rapid growth, with 2.383 million patient visits (+32% YoY) and stable average spending per visit at RMB 573 (+5% YoY) [3] - The company expanded its network to 71 medical institutions across 19 cities, up from 56 institutions in 16 cities in 2023 [3] - Gross margin improved slightly to 29.4% (+0.7pct YoY), with good cost control as the sales expense ratio decreased to 11.7% (-0.46pct YoY) [3] Financial Performance - Revenue for 1H24 reached RMB 1.365 billion (+38% YoY), driven by growth in healthcare solutions revenue of RMB 1.344 billion (+39.3% YoY) [3] - Net profit for 1H24 was RMB 107 million (+15% YoY), with adjusted net profit at RMB 148 million (+45% YoY) [2] - The company's gross margin for healthcare solutions was 29.4% (+0.6pct YoY), while gross margin for healthcare product sales improved to 27.8% (+2.6pct YoY) [3] - The company's revenue is expected to grow at a CAGR of 31% from 2024 to 2026, with net profit projected to reach RMB 603 million by 2026 [4] Expansion and Network Growth - The company added 15 new medical institutions in 1H24, including 11 acquisitions and 4 self-built facilities, bringing the total to 71 institutions [3] - The company's network now covers 19 cities, up from 16 cities in 2023 [3] - The expansion is expected to enhance the company's market share and geographic coverage [3] Valuation and Forecast - The company's EPS is projected to grow from RMB 1.35 in 2024 to RMB 2.28 in 2026, with a PE ratio of 26x in 2024, decreasing to 15x by 2026 [4] - The company's ROE is expected to improve from 12.97% in 2024 to 16.27% in 2026 [6] - The company's revenue is forecasted to reach RMB 5.23 billion by 2026, with a net profit of RMB 603 million [6] Market Sentiment - The company has consistently received "Buy" ratings from analysts, with 24 "Buy" recommendations in the past six months [8] - The market average investment recommendation score is 1.00, indicating a strong "Buy" consensus [9]
固生堂：行业需求高景气，门店扩张节奏加快