Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 70.08 [1][5][8] Core Views - The company's 3Q24 performance was strong, with total patient visits reaching 1.485 million (+25% YoY, +13.5% QoQ), driven by organic growth and new medical institutions [1] - The company is expected to achieve a 35-40% adjusted net profit growth in 2024, supported by online and offline expansion, same-store growth, and accelerated external expansion [1][5] - The report highlights the company's potential for both organic growth and external expansion, with 19 new medical institutions already established [1][3] Existing Clinics - The company's offline medical business revenue is expected to grow by 35% in 2024, driven by increased doctor numbers in key regions like Shanghai, Beijing, and Guangzhou [2] - The company's self-owned doctor contribution reached 36-37% in 3Q24, with a long-term target of 50%, which is expected to further optimize profit margins [2] New Clinics - The company acquired three new clinics in Suzhou, Kunshan, and Hangzhou in 3Q24, with controllable acquisition costs [3] - New clinics are expected to contribute approximately 10% of the company's revenue in 2024, with a total of 19 new clinics added so far and a full-year guidance of 17-22 new clinics [3] - Overseas expansion is progressing, with Singapore operations gradually ramping up, and further expansion expected in Malaysia, Hong Kong, and Taiwan [3] Policy and Repurchase - The government has introduced frequent policies to encourage traditional Chinese medicine (TCM) development, which benefits the company [4] - The company has conducted continuous share repurchases from January to September 2024, repurchasing 4.36 million shares for HKD 173 million, demonstrating confidence in its long-term growth [4] Financial Forecasts and Valuation - The company's adjusted net profit is expected to grow by 35-40% in 2024, with adjusted EPS projected at RMB 1.74, 2.30, and 2.93 for 2024-2026 [5][9] - The report assigns a 28x PE multiple for 2025, in line with comparable companies, reflecting the scarcity of TCM service providers and policy tailwinds [5] - Revenue is forecasted to grow from RMB 3.138 billion in 2024E to RMB 5.038 billion in 2026E, with net profit increasing from RMB 334.77 million to RMB 665.20 million over the same period [6][12]
固生堂（02273）：3Q诊疗量亮眼，看好内生外延发力