China Pharma Commerce 1H26 preview: revenue resilient, margins under pressure

Research evidence excerpt

China Pharma Commerce 1H26 preview: revenue resilient, margins under pressure

2 July 2026

Equity Research Report

China Pharma Commerce EquitiesHealth Care Providers &

Services

1H26 preview: revenue resilient, margins under

pressure China

◆ Top line remains resilient as prescription traffic accelerates; Linda Shu*, PhD (Reg. No. S1700522120001)

margin continues to decline on unfavourable sales mix Head of China Healthcare Research HSBC Qianhai Securities Limited

linda.y.l.shu@hsbcqh.com.cn

◆ Policy tailwinds remain; earnings benefits unlikely to +86 755 88983246

materialise in the near term Andre Sun* (Reg. No. S1700526040001)

Analyst, China Healthcare

HSBC Qianhai Securities Limited

◆ Lower target prices on YF and LBX; maintain Hold on both andre.h.j.sun@hsbcqh.com.cn

+86 21 50662034

Evie Liu* (Reg. No. S1700119110001)

Traffic improves, but structural margin pressure outweighs revenue recovery. Associate

Heading into 1H26 results, we expect little change to the top line but forecast continued Shenzhen

gross margin erosion across China’s retail pharmacy sector. After a revenue

stabilisation in 2025 and industry-wide flat growth in April 2026 (Exhibit 3), we expect * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

Yifeng (YF) and Laobaixing (LBX) to deliver 6.1% and 3.9% top-line growth,

respectively, supported by a prescription-led traffic recovery in 1H26/2026e, but more

margin pressure (expect -2ppt y-o-y), considering: 1) a product mix shift towards

lower margin categories; 2) reimbursement pressure from Basic Medical Insurance

(BMI) supervision (traceability codes, remote prescription review, payment caps and

shrinking personal accounts); and 3) still-dented discretionary consumption. The