JZJ(SH:605266)2025-08-28 15:15Summary of the Conference Call for Jianzhijia Company Overview - Company: Jianzhijia - Period: First half of 2025 Key Industry Insights - Revenue Performance: Jianzhijia experienced a slight revenue decline of 0.64% year-on-year, attributed to challenges in the healthcare policy environment. However, the company managed to achieve a 15% increase in net profit attributable to shareholders through cost control and efficiency improvements [2][5][6]. - Product Structure Adjustment: The company reduced the proportion of prescription drugs by 6.67% while increasing sales of OTC drugs by 3.9%. The focus is on enhancing the marketing of brands like Kefu Mei and Fuyi Yan, aiming to boost their sales to tens of millions [2][8]. - Online Business Growth: The share of online business increased to 29.6%, with a 13% rise in overall revenue, compensating for some offline losses [2][9]. Core Strategies and Measures - Cost Control and Efficiency: Jianzhijia implemented cost control measures starting in 2024, resulting in a significant reduction in expense growth rates. The first quarter saw a 4.74% increase in expenses, down from 13.42% the previous year, and the second quarter further decreased to 6.21% [7]. - Healthcare Policy Response: The company is addressing challenges posed by healthcare policies through the establishment of internet hospitals and compliance efforts, advocating for practical policy considerations [2][12]. - Focus on Health and Beauty Products: Jianzhijia plans to develop health and beauty products, collaborating with partners like Beitaini to enhance operational efficiency and reduce price competition [2][13]. Financial Performance - Net Profit Growth: The net profit attributable to shareholders increased by 15% year-on-year, with a significant 120% year-on-year growth in non-recurring net profit in the second quarter [2][6]. - Impact of Healthcare Policies: The company faced a 4% decline in healthcare revenue compared to the previous year, but growth in non-healthcare products helped mitigate this impact [5]. Challenges and Future Outlook - Store Count Reduction: Jianzhijia reduced its store count by 82 due to local healthcare policy restrictions, yet managed to achieve some recovery through internal growth strategies [4]. - Future Goals: The company aims to continue its cost reduction efforts, having completed about 40% of its annual target, and plans to enhance operational efficiency and inventory management [11][34]. - Market Potential: Despite regulatory challenges, the health and beauty sector shows significant growth potential, with a notable increase in sales share for functional skincare products [14]. Technology and Innovation - AI Utilization: Jianzhijia is leveraging AI technologies, such as the Deepseek model, for operational diagnostics and efficiency improvements [3][29]. - O2O Business Model: The company’s O2O business has been successful due to a solid operational team and refined management practices, ensuring synergy between online and offline sales [2][28]. Regulatory Environment - Impact of Regulatory Changes: The company acknowledges the high regulatory burden in the industry, which presents both challenges and opportunities for long-term healthy development [12][19]. - Future of Small Pharmacies: The regulatory environment may lead to a consolidation of the market, with smaller pharmacies facing significant challenges in maintaining profitability [20][21]. Conclusion Jianzhijia is navigating a complex regulatory landscape while focusing on cost control, product diversification, and leveraging technology to enhance operational efficiency. The company is optimistic about future growth opportunities in the health and beauty sector despite current challenges.