Investment Rating - The report assigns a "Buy" rating to the company, with a target price of HKD 32.00 [55] Core Views - The company is a leading provider of traditional Chinese medicine (TCM) healthcare services, offering integrated online and offline (OMO) services [88] - The company has a strong physician team, with over 39,000 licensed TCM practitioners as of August 2024, and collaborates with seven "National TCM Masters" [20] - The company's offline revenue in H1 2024 reached RMB 1.23 billion, accounting for 90.08% of total revenue, with a customer retention rate of 69.5% [35] - The company has a robust supply chain system with 452 suppliers across China, ensuring cost efficiency and stable product supply [24] Business Expansion - The company has expanded its offline service network to 19 cities in China and Singapore, with 74 offline clinics as of July 2024 [20][30] - In H1 2024, the company added 16 new clinics through self-construction and acquisitions, further expanding its presence in key cities [30] - The company's online medical platform revenue grew significantly, reaching RMB 286.2 million in 2023, driven by acquisitions of online platforms "Bailu" and "Wanjia" [96] Financial Performance - The company's revenue grew from RMB 725 million in 2018 to RMB 2.327 billion in 2023, with a CAGR of 26.2% [118] - Net profit turned positive in 2022 and reached RMB 252 million in 2023, reflecting strong operational efficiency [118] - The company's gross margin remained stable at around 30% from 2022 to 2023, with a slight decline due to adjustments in statistical standards [77] Industry Outlook - The TCM healthcare service market in China is expected to grow from RMB 800 billion in 2022 to RMB 2.1239 trillion by 2032, with a CAGR of 10.3% [127] - Aging population and rising chronic disease prevalence are driving demand for TCM services, particularly for long-term health management [128] - Government policies, such as the "14th Five-Year Plan for TCM Development," are supporting the growth of TCM services, including the expansion of private TCM clinics [133] Competitive Advantages - The company has a strong brand and extensive customer base, with over 19 million cumulative customer visits [88] - The company's "National TCM Masters" and experienced physician team enhance its service quality and reputation [22] - The company's vertical integration of the supply chain and large number of suppliers provide cost advantages and stable product supply [24] Future Growth Drivers - The company plans to continue expanding its offline clinic network, with a focus on key cities and international markets [30] - The company's online platform is expected to grow further, with projected revenue growth of 10%, 13%, and 14% from 2024 to 2026 [159] - The company's in-house production of TCM formulations, such as "Gangju Qingyan Granules" and "Xiangtao Granules," is expected to reduce costs and enhance profitability [138]
固生堂：固本培元传承国粹，名医荟聚杏林春暖