GUSHENGTANG (02273) performed well in the first half of 2025: net profit increased by 41.6%, demonstrating outstanding operational resilience and profit quality.

On August 29th, GUSHENGTANG (02273) released its mid-term performance for 2025. During the reporting period, the company's operating income was 1.49 billion yuan, a year-on-year increase of 9.5%; net profit was 150 million yuan, a year-on-year increase of 41.6%. Not only did the company achieve double growth in revenue and net profit, but also showed a high-quality growth pattern of "profit growth outpacing revenue growth". The company's core operating indicators such as user numbers and service volume have all improved, confirming the sustainability of the company's refined operation capabilities and profit model, demonstrating outstanding business resilience and profit quality in a complex macroeconomic environment. The significant improvement in profitability directly translates into tangible cash returns. During the reporting period, the company's operating cash flow was 300 million yuan, a year-on-year increase of 111%; free cash flow performance was even more robust, with a year-on-year increase of 466% to 210 million yuan. By the end of the period, the company had ample cash reserves of 1.37 billion yuan, providing solid support for the company's strategic implementation. The company exhibits the characteristic of "free cash flow growth rate > operating cash flow growth rate > net profit growth rate > revenue growth rate", fully reflecting the company's high-quality profit level. The outstanding cash flow performance is a result of the company's continuously optimized operational efficiency. The company achieved a qualitative leap in profitability in this reporting period, with EBITDA (earnings before interest, taxes, depreciation, and amortization) reaching approximately 270 million yuan, a year-on-year increase of 37.3%. This is the result of the company's "cost reduction and efficiency improvement" and "business focus" dual drivers, further enhancing GUSHENGTANG's profitability through optimizing operational processes, reducing non-core costs, and improving store productivity. In the first half of 2025, GUSHENGTANG's same-store performance accounted for over 90% of revenue, showing strong performance. During the reporting period, the company's offline business revenue was 1.37 billion yuan, a year-on-year increase of 11.1%. Among them, same-store performance accounted for 97.3% of revenue, much higher than that from new and acquired stores (2.7%). This clearly indicates that the company's growth is mainly driven by the deepening operation and efficiency release of existing stores, rather than relying on external expansion. The strategic approach of "stable blood generation of old stores, orderly expansion of new stores" effectively avoids merger and integration risks, ensuring the quality and sustainability of the company's growth. While continuing to improve same-store revenue, the company has also cautiously promoted store expansion. In the first half of the year, through a dual approach of self-building and mergers and acquisitions, GUSHENGTANG added 7 new stores (4 self-built, 3 acquired) and entered 2 new cities. By the end of the reporting period, GUSHENGTANG had a total of 83 offline stores in China and Singapore, further enhancing its coverage and regional penetration. In the first half of 2025, GUSHENGTANG's medical cooperative network made significant progress, adding 9 new cooperative units, including institutions such as Chengdu University of Traditional Chinese Medicine, Hubei Provincial People's Hospital, the Second Affiliated Hospital of Chengdu University of Traditional Chinese Medicine, and Zhongshan City Hospital of Traditional Chinese and Western Medicine, bringing the total number of cooperative units to 37. Medical cooperative network not only expands the supply of high-quality medical resources, but also reflects the high recognition of the public medical system for GUSHENGTANG's business model and service capabilities, providing strong support for long-term stable growth. In terms of doctor resources, GUSHENGTANG's medical team has expanded rapidly. By the end of June 2025, the company had a total of 41,743 doctors, an increase of 1,501 from the same period last year, with 648 new offline practicing doctors, a year-on-year increase of 23.5%. This has built a strong barrier of doctor resources for the company, demonstrating significant advantages in attracting and training doctors, providing talent support for long-term development. At the same time, the company's proprietary pricing products such as in-hospital preparations have seen explosive growth, with revenue in the first half of the year increasing by 209%. This has led to a healthier revenue structure and enhanced resilience against policy risks. In the first half of 2025, GUSHENGTANG introduced 2 new in-hospital preparations, with a total of 14 approved in-hospital preparations. Among them, the successful certification and listing of the Hair Nourishing Granules by the Health Sciences Authority of Singapore (HSA) demonstrates the company's international recognition in preparation transformation, providing a sample for the future expansion of products overseas. While strengthening its offline business, the company has also made breakthroughs in its online traffic entrance layout. By the end of June 2025, GUSHENGTANG had partnered with mainstream platforms such as Meituan, Xiaohongshu, Douyin, and Amap, building a platform-based traffic matrix covering various scenarios such as life services, social entertainment, and map navigation. This transformation from single-brand traffic to multi-platform traffic has resulted in new users acquired through multiple platforms accounting for 7.6% of the group's offline new users, with customer acquisition costs lower than the industry average, driving continuous improvement in user revisit rates and brand trust. Furthermore, the company places a high value on shareholder returns, having spent a total of 84.68 million Hong Kong dollars in the first half of the year to repurchase 2.662 million shares, canceling a total of 7.299 million shares. It also announced a distribution of 75.766 million yuan in interim dividends (50% of net profit), fulfilling its commitment to "distribute 30%-50% of net profit as dividends or repurchases annually". This demonstrates the management's strong confidence in the company's future development through tangible actions. In terms of overseas layout, Singapore as the company's first strategic overseas station has delivered better-than-expected business results. In July 2025, GUSHENGTANG's revenue from Singapore stores increased by 119%, achieving rapid growth in overseas performance within just one year. Coupled with the listing of Hair Nourishing Granules in Singapore, the "service + product" dual-wheel overseas expansion model has taken shape, providing a replicable business paradigm for the company's global development, opening up a second growth curve. Overall, GUSHENGTANG's mid-term performance in 2025 demonstrates strong comprehensive strength: in terms of endogenous aspects, both same-store revenue and profit continue to grow; in terms of external expansion, efforts in overseas and medical center city layouts are being strengthened; in terms of business structure, there are new opportunities in self-priced products and overseas operations; in terms of shareholder returns, repurchases and dividends show development confidence. In the future, with the continued release of the TCM policy dividend, increased operational efficiency, and expansion into overseas markets, GUSHENGTANG is expected to maintain a leading position in the TCM health field, creating long-term value for investors.