Group 1: Higher Education Business Growth - The company’s three educational institutions are experiencing stable growth, with a planned enrollment of 21,000 students for the 25/26 academic year, representing a 6% increase from the previous year [1] - The total number of enrolled students is expected to reach 61,000 by 2026, reflecting a year-on-year growth of 4%, with an acceleration of 1 percentage point compared to 2025 [1] - The company’s Guangdong school has completed its teaching evaluation, meeting all standards, and plans to expand enrollment starting from the 26/27 academic year [1] Group 2: Expansion in Medical and Health Care Business - The company completed the acquisition of two hospitals, including Dalian Ruikang Cardiovascular Hospital, in May 2024, marking its entry into the medical and health care sector [2] - In the first half of 2025, the medical and health care business generated revenue of 50 million yuan, accounting for 5.4% of total revenue, an increase of 4.7 percentage points year-on-year [2] - The average bed occupancy rate at Ruikang Cardiovascular Hospital was 45%, with outpatient and emergency visits exceeding 28,000 and inpatient and surgical cases surpassing 5,800, marking a 34% increase compared to the same period in 2024 [2] Group 3: Financial Projections and Adjustments - Despite a decline in higher education revenue by 2.9% to 779 million yuan in the first half of 2025 due to a decrease in student numbers at a high-fee Guangdong institution, the company anticipates a rebound in revenue as enrollment increases in the new academic year [3] - The revenue forecast for 2025 has been adjusted down to 2.14 billion yuan, with new projections for 2026 and 2027 set at 2.23 billion yuan and 2.38 billion yuan, respectively [3] - The target price has been revised down to 3.3 HKD, indicating a potential upside of 20% from the current price, while maintaining a buy rating [3]

Core Viewpoint - The aggressive expansion strategy of the company has led to significant profit erosion, with a drastic decline in net profit for 2024, marking a historical low since its listing [1][5]. Financial Performance - In 2024, the company reported a net profit of 114 million yuan, a year-on-year decrease of 79.23%, continuing a trend of declining profits for the second consecutive year [1][5]. - The company's revenue for 2024 was 18 billion yuan, reflecting a growth of 3.57% compared to the previous year [5]. - The company experienced a decline in net profit and revenue in 2023, with net profit dropping to 549 million yuan, a decrease of 45.6% year-on-year [5]. Expansion Strategy - The company has adopted a "land grab" strategy, opening over 1,000 new stores annually, with a total of 11,498 stores as of December 31, 2024 [4][5]. - The company plans to continue expanding its store presence in the Sichuan-Chongqing region while optimizing existing stores rather than significantly increasing the number of new stores [6]. Business Segments - The company derives 71.88% of its revenue from pharmaceutical retail, amounting to 12.938 billion yuan, while wholesale revenue accounts for 22.71% [3]. - The company is investing 24 million yuan in real estate to enhance its medical and elderly care business, which is seen as a strategic move in response to the growing elderly care market [2][3]. Market Trends - The elderly care market in China is expanding, with a market size of 12 trillion yuan in 2023, expected to reach 30 trillion yuan by 2035 [2]. - The company is integrating medical, rehabilitation, nursing, and elderly care services to create a comprehensive healthcare ecosystem [2][3].