Investment Rating - The report assigns a "Buy" rating to Gushengtang (02273 HK) with a target price of HKD 48 11 per share based on a 25X PE multiple for its 2024 NonGaap net profit [2][4] Core Views - Gushengtang achieved rapid growth in H1 2024 with revenue of RMB 1 365 billion (+38 4% YoY) and adjusted net profit of RMB 148 million (+45 3% YoY) demonstrating strong operational capabilities and the vast potential of the TCM chain clinic model [2] - The company is expanding rapidly through both self-built and M&A strategies adding 4 new self-built clinics and acquiring dozens of offline medical institutions including Kunshan Laien and Beijing Asian Games Village TCM Hospital It has also entered new cities like Changsha and Xuzhou and expanded internationally with the acquisition of Singapore-based Baozhongtang [2] - Gushengtang announced its first interim dividend of HKD 0 13 per share to be distributed on September 25 2024 and repurchased approximately 860 000 shares for HKD 33 77 million in June 2024 to boost investor confidence [2] Financial Performance and Projections - Revenue is projected to grow from RMB 2 323 billion in 2023 to RMB 5 594 billion in 2026 with a CAGR of 32 7% [3][8] - NonGaap net profit is expected to increase from RMB 305 million in 2023 to RMB 763 million in 2026 with a CAGR of 32 4% [3][8] - The company's gross margin is forecasted to remain stable at around 30 6%-31 4% from 2024 to 2026 [9] Expansion and Strategy - Gushengtang's offline TCM clinics now cover 19 cities domestically and internationally with 72 branches as of June 2024 [2] - The company is accelerating its city-level penetration and new city expansion while also pursuing international growth through acquisitions [2] Valuation and Metrics - The report values Gushengtang at a 25X PE multiple for its 2024 NonGaap net profit resulting in a target price of HKD 48 11 per share [2] - Key valuation metrics include a projected NonGaap PE of 18 7X for 2024 and an EV/EBITDA of 11 5X for the same year [3][9]
固生堂：业绩高速增长，服务网络持续加密