Core Viewpoint - Health 160 International Limited is launching an IPO in Hong Kong, aiming to raise approximately HKD 363.6 million for expanding medical resources, enhancing R&D, and strategic acquisitions [3][4]. Company Overview - Health 160 is a leading pharmaceutical wholesaler and digital healthcare service provider in China, focusing on "pharmaceutical sales" and "digital healthcare solutions" [3][4]. - The company connects over 44,600 healthcare institutions, including 14,400 hospitals, and has over 902,300 healthcare professionals registered on its platform [4]. Main Business - The company operates a diversified business matrix consisting of pharmaceutical sales and digital services, with the wholesale model being the primary revenue driver [5][7]. - In Q1 2025, the wholesale model accounted for 64.3% of revenue, while the retail model contributed 2.6% [5][7]. Financial Analysis - The company has shown stable revenue growth, with total revenues of RMB 525.6 million in 2022, RMB 628.6 million in 2023, and RMB 620.7 million in 2024 [6][8]. - The net loss narrowed from RMB 120.1 million in 2022 to RMB 17.1 million in Q1 2025, indicating improved cost control and profitability [6][8]. Competitive Advantages - Health 160's competitive edge lies in its extensive medical resource network and collaborative platform ecosystem, which includes partnerships with over 14,400 hospitals [9][10]. - The company has a user repurchase rate of 84.6% in Q1 2025, reflecting strong customer retention [9]. Industry Outlook - The Chinese healthcare market is projected to reach RMB 120.2 billion in 2024, with a CAGR of 7.9% from 2019 to 2024, while the digital healthcare sector is expected to grow at a CAGR of 32.1% [11][12]. - The aging population and supportive policies are key drivers of industry growth [11]. Valuation Analysis - The estimated market capitalization post-IPO is between HKD 40-50 billion, with a price-to-sales ratio of approximately 5.84-7.30 times, which is higher than comparable companies [13]. - Long-term valuation potential exists if the company can increase its digital business revenue and optimize its wholesale margins [13].

Investment Rating - The investment rating for the company is maintained at "Buy" with a target price of RMB 31.31 [1][5][6] Core Views - The company's performance in the first half of 2025 is under pressure due to industry policy changes, intensified market competition, and extended customer payment cycles, leading to a year-on-year decline in revenue and net profit [1][2] - Despite the short-term challenges, the company is expected to improve its performance as the effects of its high-quality development strategy become evident [1][5] - The company is focusing on enhancing its distribution and retail segments, particularly through the integration of innovative drug businesses and the expansion of its self-owned brand [2][3] Summary by Sections Distribution - In the first half of 2025, distribution revenue was RMB 267.83 billion, down 1.09% year-on-year, with net profit decreasing by 7.82% to RMB 4.82 billion [2] - The decline in net profit is attributed to increased long-term accounts receivable due to delayed payments from downstream customers, leading to higher bad debt provisions [2] - The company is accelerating the integration of its narcotic and psychotropic drug business, with notable sales growth in specific segments [2] Retail - The retail segment, represented by Guoda Pharmacy, reported revenue of RMB 104.79 million, a decrease of 6.46% year-on-year, while net profit increased significantly by 215.81% to RMB 0.17 million [3] - The company is optimizing its business structure and enhancing profitability through self-owned brand development and strategic store closures [3] - The gross margin for Guoda Pharmacy's direct sales improved by 1.25 percentage points year-on-year due to effective procurement cost optimization [3] Financial Metrics - The overall expense ratio for the company decreased year-on-year, while the gross margin slightly declined to 10.69% [4] - The company forecasts a decline in wholesale and retail business revenue expectations, with projected net profits for 2025-2027 being RMB 13.52 billion, RMB 13.78 billion, and RMB 14.00 billion respectively [5][7] - The estimated EPS for 2025 is RMB 2.43, with a corresponding PE ratio of 10.62 [7]