Core Viewpoint - The company reported strong financial performance for H1 2025, with significant growth in revenue and net profit, driven by self-owned brand business and digital transformation initiatives [1][9]. Financial Performance - In H1 2025, the company achieved revenue of 9.843 billion yuan, a year-on-year increase of 11.7% [1] - The net profit attributable to shareholders reached 78 million yuan, up 258% year-on-year [1] - Adjusted net profit was 122 million yuan, reflecting a growth of 33.2% [1] - The gross margin improved to 11.2%, an increase of 1.2 percentage points [1] Business Segments Self-operated Business - The self-operated business generated revenue of 9.389 billion yuan, a 12.5% increase year-on-year [1] - The gross margin for self-operated business was 7.7%, up 1.8 percentage points [1] - The average monthly SKU count for self-operated business reached 480,000, with a declining return rate from 0.5% to 0.4% [2] Platform Business - The platform business reported revenue of 436 million yuan, a slight decline of 0.9% [1] - The average commission rate increased to approximately 3.3% [2] - The platform provided 125,000 SKUs to downstream customers, a year-on-year increase of 22.5% [2] Brand Promotion and Own Brand Business - The GMV for brand promotion reached 1.08 billion yuan, a growth of 115.6% [3] - The GMV for self-owned brands surged to 852 million yuan, a remarkable increase of 473.4% [3] Supply Chain Management - The company optimized its smart supply chain system, leading to an 18.9% reduction in unit fulfillment costs for same-city delivery [4] - The proportion of orders delivered within half a day increased from 67.7% to 70.0% [4] - The cash conversion cycle improved, with accounts payable turnover days at approximately 67.7 days [4] Digital Transformation - The company launched the "Spectrum Cabin" solution, integrating AI and hardware for healthcare services [5] - The "Spectrum Cloud Diagnosis" SaaS system has been implemented in over 1,500 clinics, facilitating insurance settlement for patients [7] - The AI-assisted system "Spectrum AI Doctor" provides health advice and enhances patient self-care capabilities [7] Strategic Partnerships - The company partnered with Yuejiang to explore the application of collaborative robots and AI in the pharmaceutical industry [8] - The SaaS solutions "Cloud Business" and "Store Easy" have expanded their user base significantly, serving over 9,000 sellers and 66,000 buyers respectively [8] Shareholder Returns - In H1 2025, the company repurchased and canceled 5.635 million shares, reflecting a commitment to shareholder returns [9]

Group 1 - The core viewpoint of the articles emphasizes the alignment of government policies aimed at enhancing grassroots healthcare with the business model of Yaoshi Bang, which operates extensively in community pharmacies and clinics [1] - The policy document highlights the need to improve accessibility to grassroots medical services, an area where digital healthcare companies like Yaoshi Bang excel [1] - Yaoshi Bang has established a significant presence in the grassroots healthcare sector, covering 491,000 pharmacies and 330,000 clinics, reaching 98.9% of counties and 91.2% of townships in China, with a monthly active buyer count of 433,000 and a payment rate of 92.7% [1] Group 2 - In response to the weak testing capabilities at grassroots medical terminals, Yaoshi Bang has launched the "Spectrum Cabin" smart medical solution, deploying 14,000 instant testing devices (POCT) across over 11,000 end-users by the end of 2024 [2] - The "Spectrum Cabin" integrates POCT, clinic SaaS, and AI doctor assistance systems to provide low-cost, highly compatible medical testing services for grassroots clinics [2] - Yaoshi Bang has invested in a commercial insurance service provider, holding a 13% stake in Ruize Health, which enhances its ecosystem by forming a "prevention-diagnosis-medication" closed loop, tapping into the market potential of "common drugs + insurance" [2]

Investment Rating - The report assigns a "Buy" rating for the company, with a target price of HKD 9.88, reflecting a potential upside from the current price of HKD 8.35 [7]. Core Insights - The company, established in 2015, is the largest digital comprehensive service platform in China's outpatient pharmaceutical industry, focusing on digital solutions to empower the entire industry chain [1][14]. - The company has achieved a significant revenue growth from CNY 3.252 billion in 2019 to CNY 17.904 billion in 2024, with a CAGR of 40.66%. It also reported a net profit of over CNY 30.01 million in 2024, marking its first profitable year [1][21]. - The digitalization trend in the healthcare sector is driving the company's growth, with a focus on enhancing the capabilities of grassroots medical institutions through innovative solutions like the "Spectrum Cabin" [4][42]. Summary by Sections 1. Business Model and Growth - The company operates a "platform + self-operated + brand promotion" model, covering the entire outpatient pharmaceutical industry chain [1][14]. - The platform business connects upstream pharmaceutical distributors with downstream pharmacies and grassroots medical institutions, enhancing operational efficiency [2][47]. - The self-operated business focuses on exclusive strategic partnerships and proprietary brands, with over 830 SKUs and a GMV of CNY 651 million in 2024, reflecting a 152% year-on-year growth [3][18]. 2. Financial Performance - The company reported a revenue of CNY 17.904 billion in 2024, a 5.5% increase year-on-year, with self-operated business contributing CNY 16.973 billion [21][23]. - The overall gross margin remained stable, with a slight increase from 10% in 2020 to 10.1% in 2024, while the self-operated business gross margin improved from 5.1% to 6.2% [27][30]. 3. Market Dynamics - The outpatient pharmaceutical market in China is highly fragmented, with significant growth potential driven by policy support and digitalization [35][36]. - The digitalization of the outpatient pharmaceutical market is still in its early stages, with a penetration rate of only 28.2% as of 2022, indicating substantial room for growth [42][43]. 4. Operational Efficiency - The company has improved its operational efficiency, with a decrease in sales and management expense ratios, and a net profit margin returning to positive territory [30][31]. - The platform's average SKU count has grown to over 3.9 million by 2024, enhancing product availability and meeting diverse buyer needs [49][55]. 5. Management Team - The management team possesses extensive experience in both the pharmaceutical industry and technology, which aids in strategic planning and execution [32][34].