固生堂(02273.HK):民营中医医疗服务龙头 把握优质中医资源

Gushengtang (02273.HK): Private TCM Medical Service Leader Seizes High Quality Traditional Chinese Medicine Resources

招商證券 ·  Jun 11

The company is a leading provider of traditional Chinese medicine services in China. It cooperates with many hospitals and universities of traditional Chinese medicine, accelerates cooperation with medical consortia, firmly grasps high-quality traditional Chinese medicine resources, and steadily promotes nationwide expansion plans and international development processes through “self-building+mergers and acquisitions” two-wheel drive, and physicians' reserves continue to increase.

Seize high-quality traditional Chinese medicine resources and expand the network layout of traditional Chinese medicine medical services. (1) The company cooperated with many hospitals and traditional Chinese medicine universities to obtain high-quality traditional Chinese medicine resources, adopt a mentor-apprentice teaching model, and promote high-quality medical resources to the grassroots level; (2) build an OMO business model to break through the time and space barriers of traditional consultations, solve pain points such as imbalance in regional physicians' resources, customer follow-up and long-term health management inconvenient, and expand the customer base; at the same time, the company's online business grew rapidly. The online business accounted for 12.3% in 2023 (12.3%);) As a leader in traditional Chinese medicine services, the company continues to expand its medical service network coverage through “self-building+mergers and acquisitions”. As of December 31, 2023, the company has opened 56 offline traditional Chinese medicine diagnosis and treatment institutions in 16 cities across the country, with stores in Beijing, Shanghai, Guangzhou, Shenzhen, Foshan, Zhongshan, Fuzhou, Nanjing, Suzhou, Ningbo, Hangzhou, Zhengzhou, Kunshan and Wuhan.

Favourable policies blow frequently, and the business model is highly in line with national policies and regulations and medical reform and development requirements. (1) In recent years, the Health Insurance Administration's policies to support Internet+ traditional Chinese medicine have been introduced one after another, clearly stating that Internet traditional Chinese medicine can be included in medical insurance payments in the future, and that the service value of Internet medical care is more fully reflected in the new payment methods; (2) According to the National Administration of Traditional Chinese Medicine's interpretation of the “14th Five-Year Plan”, the interpretation of building a high-quality and efficient traditional Chinese medicine service system indicates: promote the construction of traditional Chinese medicine centers and encourage social forces to run traditional Chinese medicine at the grassroots level and implement famous medical center projects. The company is committed to developing traditional Chinese medicine grass-roots services, which is highly compatible with the current development, layout and support of the traditional Chinese medicine industry and industry in China.

The company's operating strategy is mature, high-profile medical experts gather, and the business model is highly replicable. (1) The company's stores are highly replicable, and the payback period is short. In the future, the company plans to encrypt existing cities through self-building+mergers and acquisitions while expanding into new cities; (2) Prestigious medical experts gather to continue to enhance patients' stickiness and reputation. As of December 2023, the company has more than 37,000 traditional Chinese medicine practitioners online and offline, accounting for nearly 40% of them.

Profit forecasting and investment advice. We expect the company's adjusted net profit for 2024-2026 to be 411/555 million yuan, respectively, up 35%/36%/35% year-on-year, respectively. The current market value corresponds to PE of 23.3/17.1/12.7 times, respectively. This is the first coverage, giving it a “Highly Recommended” rating.

Risk warning: risk of brain drain in traditional Chinese medicine, risk of increased market competition, risk of changes in Internet medical supervision policies, etc.

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