Goldman Sachs China Healthcare Services: Drug Chains: FY25 & 1Q26 Wrap-Up: Leading Companies First to Bottom Out
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Key Views
Leading players significantly outperformed peers. Dashenlin and Laobaixing posted roughly 12% and 11% revenue growth respectively in FY2025, with net profit growth of approximately 10% and 9%. Their same-store sales grew 4–5%, while smaller chains experienced 2–3% declines. Leading companies maintained gross margins around 35% and reduced selling expense ratios by 0.5 percentage points to approximately 20%. In 1Q2026, leaders sustained momentum with approximately 10% revenue growth and 8% net profit growth, whereas smaller chains' net profit fell about 5%.
Outlook
Goldman expects leaders to maintain 10–12% revenue growth and 8–10% net profit growth in 2Q2026 and the second half. Smaller chains may need one to two quarters to bottom out. Key risks include expanded drug procurement policies, online channel disruption, and weak consumer confidence. Leading companies trade at approximately 20x P/E, below their historical average of 25x.
Recommended Securities
- Dashenlin: Buy
- Laobaixing: Buy
- Yifeng Pharmacy: Neutral
- Yixintang: Sell
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Exhibit 7
