Gushengtang 1Q26 visits rose 15% YoY, with growth momentum matching full-year guidance

Overview

This report comments on the 1Q26 operating update of Gushengtang Holdings (2273.HK). Total customer visits in 1Q26 were approximately 1.39 million, up 15% YoY, consistent with FY26 revenue growth guidance of 15% YoY. The stock reacted positively after the update, rising as much as about 10% intraday and closing up about 4.5%. Management attributed growth to strong organic expansion of the existing clinic network and emphasized that the company is returning to a growth-first strategy.

Core views

Goldman Sachs’ core view is that Gushengtang’s 1Q26 visit growth, improved physician recruitment efficiency, progress in the M&A pipeline, and commitment to shareholder returns together support the company’s medium- to long-term growth. The number of newly hired doctors increased by about 50% YoY, and first-year revenue contribution from new doctors increased by about 80% YoY, indicating resilient demand and improved physician onboarding efficiency. Management set a long-term target of group revenue exceeding RMB10 billion by 2030 and overseas business contributing more than 20%, with growth driven by organic expansion of the existing clinic network as well as domestic and overseas M&A.

Analysis framework

The report is primarily based on the company’s 1Q26 operating data, management update call, company announcements, Goldman Sachs forecasts, FactSet price data, and a peer valuation framework. On valuation, the 12-month target price of HK$35.40 is based on a 12-month forward P/E of 18x, with reference to the PEG framework of peers including traditional Chinese medicine manufacturers and healthcare service providers.

Methodology notes

• Valuation methods12-month forward P/E

  12m fwd 18x PER

  Goldman Sachs sets Gushengtang’s 12-month target price at HK$35.40, corresponding to a 12-month forward P/E of 18x, with reference to the PEG levels of a blended peer group of traditional Chinese medicine manufacturers and healthcare service providers.

• Factor analysisGS Factor Profile

  Growth、Financial Returns、Multiple、Integrated

  Goldman Sachs’ factor framework compares a stock’s characteristics versus the market and industry peers across growth, financial returns, valuation multiples, and integrated indicators, with metrics based on Goldman Sachs analyst forecasts and converted into percentiles.

• M&A frameworkM&A Rank

  M&A Rank 3

  Goldman Sachs’ M&A Rank measures the probability of a company becoming an acquisition target on a scale of 1 to 3; Gushengtang is disclosed as M&A Rank 3, which usually represents a low probability of 0%-15% and is generally not included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Gushengtang Holdings (2273.HK)

  Covered company in the report, Buy rating, 12-month target price HK$35.40.

  Strengths

  Visits up 15% YoY; significant improvement in the number of new doctors and first-year revenue contribution; clear long-term revenue target; active M&A pipeline; dividend and buyback enhance cash returns.

  Weaknesses

  Growth depends on physician recruitment, improved clinic productivity, and M&A integration; ASP is expected to remain broadly stable, so revenue growth relies more on traffic and expansion.

  Comparison

  The target price references the PEG framework of a blended peer group of traditional Chinese medicine manufacturers and healthcare service providers; the coverage universe includes AK Medical, Hygeia Healthcare, Topchoice Medical, WuXi AppTec, and other healthcare service and pharmaceutical-related companies.

  Risks

  Intensifying competition, slower-than-expected geographic expansion, insufficient accretion from M&A, policy impacts on margins, talent recruitment and retention challenges, and uncertainty from anti-corruption activities.

Key data

• 1Q26 customer visitsapproximately 1.39 millionUp 15% YoY, consistent with FY26 revenue growth guidance.
• FY26 revenue growth guidanceapproximately 15% YoYManagement guidance is consistent with the 1Q visit growth rate.
• Number of newly hired doctorsapproximately +50% YoYManagement said physician recruitment accelerated.
• First-year revenue contribution from new doctorsapproximately +80% YoYIndicates improved ramp-up efficiency for new doctors and stronger demand resilience.
• 2030 revenue targetmore than RMB10 billionManagement’s long-term growth framework target.
• Long-term overseas business contribution targetmore than 20% of total salesOverseas platform expansion is part of long-term growth.
• Singapore FY26 revenue guidanceRMB200-300mnSingapore ASP is about 3x the domestic level.
• Annual M&A targetapproximately RMB1 billion/yearAbout 50% directed overseas, funded by bank financing and internal cash.
• Cumulative M&A capacity over the next five yearsapproximately RMB5 billionManagement said bank financing can reach up to about 80% of transaction value.
• Projects under due diligence6 projects, size exceeding RMB200mnThe M&A pipeline is progressing.
• Projects in advanced discussion stagemore than 10 projects, approximately RMB800-900mnCovers both domestic and overseas markets, including Hong Kong and Malaysia.
• M&A payback period3-4 yearsBenefiting from lower entry multiples and scale synergies, with PS below 1x in some cases.
• 2026 minimum dividendHK$450mnA payout ratio of no less than 60% or a floor of HK$450mn will be maintained over the next three years.
• New buyback authorizationHK$300mnPending approval at the May extraordinary general meeting.
• Implied dividend yieldapproximately 7%Total cash return exceeds 10%; about 14% including Boyu Capital-related buybacks.
• 12-month target priceHK$35.40Based on a 12-month forward P/E of 18x.
• Current priceHK$27.82As of the close on April 21, 2026.
• Implied upside27.2%Calculated from the target price relative to the current price.
• Market capitalizationHK$6.6bn / US$844.0mnFrom the Goldman Sachs forecast table.
• Enterprise valueHK$6.0bn / US$765.0mnFrom the Goldman Sachs forecast table.
• 2026E revenueRMB3,731.1mnGoldman Sachs forecast.
• 2026E EBITDARMB745.5mnGoldman Sachs forecast.
• 2026E EPSRMB1.71Goldman Sachs forecast.
• 2026E P/E14.1xGoldman Sachs forecast.
• 2026E free cash flow yield11.1%Goldman Sachs forecast.

Impact & implications

The operating update reinforces the credibility of Gushengtang’s growth-first strategy. Visit growth is in line with full-year revenue guidance, indicating continued resilience on the demand side; improvements in physician recruitment and contributions from new doctors should enhance the organic growth of the existing clinic network; M&A funding capacity and project reserves provide visibility for inorganic growth; and dividend and buyback arrangements improve the attractiveness of shareholder returns. Potential pressure lies in ASP being broadly expected to remain stable, while declines in some Chinese herbal medicine costs could mechanically lower ASP, though they may also support margin expansion.

Risks

• Competition from private and public healthcare service providers is higher than expected.
• The pace or outcome of geographic expansion into new provinces and cities may fall short of expectations.
• The ability to acquire M&A targets with accretive effects may be weaker than expected.
• Government policy may have an unexpected impact on margins.
• There may be challenges in recruiting and retaining doctors and other talent.
• There is uncertainty regarding the impact of anti-corruption activities.
• Overseas expansion and cross-border M&A may bring integration, regulatory, and execution risks.

What to watch

• Whether customer visits in subsequent quarters continue at a pace close to FY26 revenue growth guidance.
• Whether the pace of new doctor recruitment, retention rates, and first-year revenue contribution continue to improve.
• The post-consolidation revenue contribution and integration effect of Shandong New Sunshine.
• The progress of overseas business expansion in Singapore, Hong Kong, Malaysia, and other markets, as well as ASP differences.
• The conversion rate, valuation, and payback period of M&A projects moving from due diligence and advanced discussions to completion.
• Whether the HK$300mn buyback authorization can be approved at the extraordinary general meeting and executed.
• Delivery of the HK$450mn minimum dividend in 2026 and the dividend commitment over the next three years.
• The net impact of declining Chinese herbal medicine costs on ASP and margins.