Core Viewpoint - The completion of the acquisition of 100% equity in Singapore's Dazhongtang marks a significant step for the company towards large-scale overseas expansion, with plans to increase the number of clinics in Singapore and enter markets like Hong Kong and Malaysia [1][2]. Group 1: Acquisition and Expansion Plans - The company has acquired 14 traditional Chinese medicine clinics in Singapore, covering key business districts and residential areas [2]. - The revenue of Dazhongtang in 2024 was approximately 8 million Singapore dollars (around 50 million RMB), with a growth rate exceeding 5% in 2025 [2]. - The company aims to acquire an additional 10-20 clinics in Singapore and become the leading TCM service brand in the region by 2026 [2]. Group 2: Domestic Market and Policy Environment - The domestic policy environment is stabilizing, which is favorable for leading companies in the industry [2]. - In Wuxi, the company's store revenue increased by over 40% year-on-year in October 2025, with a profit margin of 26%, significantly above the company average [2]. - The optimization of traditional Chinese medicine decoction pieces procurement rules allows the company to enjoy favorable pricing without participating in collective procurement [2]. Group 3: Shareholder Returns and Financial Outlook - The company has repurchased shares worth 232 million HKD from July 1 to November 17, 2025, significantly exceeding the 85 million HKD repurchase in the first half of the year [3]. - The management has committed to maintaining a 50% dividend payout ratio, reflecting confidence in the company's growth [3]. - The adjusted revenue growth forecasts for 2025E, 2026E, and 2027E are 11.3%, 21.9%, and 24.0%, respectively, with adjusted net profit growth of 11.9%, 23.8%, and 26.3% [3].

Investment Rating - The report maintains a "Buy" rating for the company [7][3][8] Core Views - The company has completed the acquisition of 100% of the shares of a Singapore-based TCM clinic, marking the beginning of its overseas expansion [7][8] - The company plans to increase its store count in Singapore and expand into markets such as Hong Kong and Malaysia, with expected overseas revenue of 200-300 million RMB by 2026 [7][8] - The domestic policy environment is stabilizing, which is expected to benefit leading companies in the sector [7][8] - The management's confidence is reflected in significant share buybacks and a commitment to maintain a 50% dividend payout ratio [7][8] Financial Summary - Sales revenue is projected to grow from 3,022 million RMB in FY24 to 4,099 million RMB in FY26, representing a growth rate of 30.1% and 21.9% respectively [2][12] - Adjusted net profit is expected to increase from 400 million RMB in FY24 to 555 million RMB in FY26, with growth rates of 31.4% and 23.8% respectively [2][12] - The adjusted earnings per share (EPS) is forecasted to rise from 1.64 RMB in FY24 to 2.40 RMB in FY26 [2][12] Valuation - The target price is set at 44.95 HKD, with a potential upside of 50.3% from the current price of 29.90 HKD [3][7] - The adjusted price-to-earnings (PE) ratio for FY26 is estimated at 11.5x [7][10] Shareholder Structure - The largest shareholder holds 35.1% of the company, indicating a concentrated ownership structure [4]