Financial Services Association, May 17 (Reporter He Fan) At the performance conference held today, Liu Changyun, chairman of Kyushu Express (600998.SH), said that currently, Good Pharmacist's “10,000 Stores to Join” plan is progressing smoothly. By the end of the first quarter of this year, the number of stores had reached 21,192. However, against the backdrop of rapid growth in the number of stores, the company's revenue growth rate fell to single digits, and performance declined even more in the first quarter of this year. Furthermore, the company's subsidiaries have been repeatedly punished for issues such as selling poor drugs, and how to effectively supervise the subsidiaries is a problem that Kyushu Express needs to solve urgently.

According to reports, Kyushu Express's main business covers fields such as pharmaceutical distribution, new pharmaceutical retail, pharmaceutical industry, and pharmaceutical CSO. In the new retail sector, Good Pharmacist's “Ten Thousand Stores to Join” has established a nationwide digital franchise pharmacy network. The total number of directly-operated and franchised stores is expected to exceed 25,000 in 2024, and more than 30,000 in 2025.

During the results meeting, Liu Changyun told the Financial Federation reporter that he plans to expand the regional chain to 27 companies within the next 1-2 years, covering all provinces in the country. At the same time, the company is also focusing on developing direct-run stores and specialty pharmacies, and promoting the development of new retail and e-commerce businesses through an integrated online and offline strategy.

Although the number of stores is increasing rapidly, judging from financial reports, the company's revenue in 2023 was 15.140 billion yuan, up 6.92% year on year. The growth rate fell to single digits for the first time in ten years. By the first quarter of this year, operating income and net profit had decreased by 3.85% and 4.19%, respectively. A Financial Services Association reporter asked about measures to deal with the decline in performance, but as of the end of the performance meeting, the company had not responded.

On the other hand, in the midst of rapid expansion, Kyushu-dori's subsidiaries were repeatedly punished for non-compliance. According to the Credit China website, on February 20, 2023, Shandong Jiuzhou Express, a wholly-owned subsidiary of Kyushu Express, was confiscated 126,300 yuan of illegal proceeds by the Shandong Drug Administration for selling “other acetamasol injections that do not meet drug standards.” According to commercial data, on June 27 of the same year, the company had illegal proceeds confiscated for selling other “sodium chloride injections” that did not meet drug standards.

Fujian Jiuzhou Express has also been punished several times for selling bad drugs. Penalties include warning and confiscation of illegal proceeds. A Financial Services Association reporter asked questions about how the company can improve this, but as of the end of the results meeting, Kyushu Express had not responded either.

In addition to selling poor drugs, Kyushu-dori's subsidiary also has other problems. For example, on January 23 of this year, the military procurement network announced that Guangzhou Jiuzhou Medical Devices Co., Ltd. was banned for life from participating in military procurement activities due to regular differences in the bid prices of the two other suppliers and the unusually consistent bidding documents for the electric oven procurement project.