First Read: Gushengtang Holdings "Heathcare virtual tour takeaways: Organic..."

Research evidence excerpt

First Read: Gushengtang Holdings "Heathcare virtual tour takeaways: Organic..."

1.66

sales density vs China. Beyond Singapore, GST plans to enter Malaysia and Hong Kong

12/26E 2.00 1.84

via M&A this year, with longer-term expansion into Korea, Australia, and other Western 12/27E 2.40 2.15

markets. Despite variations in store size, treatment mix, and pricing across markets,

overall profitability remains broadly in line with mature domestic clinics. Henry Liu, CFA

Analyst

Domestic M&A steadily progressing; piloting more self-pay service formats henry-za.liu@ubs.com

+86-105-832 8509

According to mgmt., the regulatory environment has remained stable YTD with limited

operational risk from reimbursement controls or TCM decoction pieces GPO. The M&A Chen Chen, PhD

Analystenvironment has become more attractive, with acquisition multiples declining to <1.0x

S1460520100001

PS (recent deals at 0.7-0.8x) and c6-7x PE, as smaller clinics face consumption and

chen-zb.chen@ubs.com

reimbursement pressures. Ideal targets are larger clinics with stable patient flow; beyond +86-10-5832 8201

announced deals in Jinan and Tianjin, GST is also in discussions with targets in Beijing,

Judy XieWuhan, and Guangzhou. In addition to domestic expansion, GST is growing self-pay

Associate

services (e.g., premium decoction pieces, nurse-led treatments, TCM beauty) and

S1460125100001

piloting light clinics targeting white-collar demand for physical TCM therapies. judy.xie@ubs.com

+86-105-832 8006

Valuation: PT of HK$42.70, Buy rating

Our DCF-based price target of HK$42.70 (WACC 11.3%) implies 18x/15x 2026E/27E

adjusted P/E. GST remains our top pick within healthcare services.

Highlights (Rmbm) 12/22 12/23 12/24 12/25E 12/26E 12/27E 12/28E 12/29E

Revenues 1,625 2,323 3,022 3,249 3,753 4,431 5,318 6,459