New stock interpretation|Leading Chinese medicine medical service industry Beijing Tongrentang health careMultiple drivers to maintain stable performance growth, the future potential of AI in the Chinese medicine industry is promising.

As the Hong Kong stock market's healthcare sector ushers in a new wave of listings, a rare target with a combination of "century-old brand moat" and "multi-level standardization chain of traditional Chinese medicine" has officially emerged. It is understood that Beijing Tongrentang Healthcare is about to be listed on the main board of the Hong Kong Stock Exchange, with CICC as its sponsor. The company is the core segment of Beijing Tongrentang Group that strategically focuses on traditional Chinese medicine healthcare services. According to Frost & Sullivan, Beijing Tongrentang Healthcare is the largest traditional Chinese medicine hospital group in China's private sector based on total outpatient visits and inpatient visits by 2024, ranking at the forefront of the industry. What is worth noting is that Beijing Tongrentang Healthcare is not just a simple "old brand listing" - its development model is also unique. Through "internal standardization + external diversification" and output management to both public and private sectors, the company achieves a multi-drive effect. Its revenue from 2022 to 2024 increased from 911 million yuan to 1.175 billion yuan, with revenue of 858 million yuan in the first nine months of 2025, maintaining a year-on-year growth and stable profit levels. In addition, the company has healthy cash flow, with net cash flow from operations continuously inflowing. As of September 2025, it had 225 million yuan in cash and cash equivalents. In addition, as the core carrier of the implementation of AI + traditional Chinese medicine by Beijing Tongrentang, this company is standing at a historical turning point where traditional Chinese medicine and artificial intelligence intersect. Backed by Beijing Tongrentang's industrial resources, Beijing Tongrentang Healthcare focuses on leveraging its unique advantages in traditional Chinese medicine disease treatment, health maintenance, and standardization of traditional Chinese medicine. Furthermore, as the core carrier of AI + traditional Chinese medicine by Beijing Tongrentang, this company is at the forefront of the intersection between traditional Chinese medicine and artificial intelligence. So, what is the investment logic behind Beijing Tongrentang Healthcare? How should investors assess its long-term value? Multi-drive development, strong certainty in performance growth It is known that Beijing Tongrentang Healthcare was established in 2015, focusing on "medicine and health," and has built a characteristic service system of "traditional Chinese medicine +." Currently, it has established a hierarchical traditional Chinese medicine healthcare service network, including 12 self-owned offline medical institutions, an internet hospital, and 12 managed offline medical institutions, forming three main businesses in traditional Chinese medicine healthcare, medical management, and sales of health products. These three areas complement each other and mutually promote each other. In the first three quarters of 2025, the revenue contributions of these businesses were 84.3%, 1.3%, and 13.6%, respectively. Strong resiliency in internal growth: Traditional Chinese medicine healthcare services are the company's core revenue source. Despite external pressures, its business revenue growth is stable, with growth primarily driven by traditional Chinese medicine healthcare services, especially in gross profit margin accounting for nearly eighty percent. It is worth noting that the company's traditional Chinese medicine healthcare services were mainly distributed in Beijing, Zhejiang, and Shanghai in the past, but in recent times, the revenue share from other regions has been increasing, from 6.6% in 2022 to 17% in the first three quarters of 2025, showing the effectiveness of the company's business expansion. Beijing Tongrentang Healthcare plans to upgrade some of its self-owned medical institutions from 2025 to 2029, including renovating the campuses, purchasing advanced medical examination equipment, exploring the "traditional Chinese medicine +" model, and investing more funds in digitalization and smart construction. Meanwhile, through collaborations with more traditional Chinese or integrated traditional Chinese and Western medical institutions, as well as strengthening joint consultation and customer referrals with external medical institutions, the company aims to expand its customer base to a broader geographic region. Wuxi Online Offline Communication Information Technology Co., Ltd.'s integrated service network greatly expands its service coverage and unlocks development potential. The steady implementation of these strategies is expected to accelerate performance growth. External growth not dependent on capital: On one hand, through acquisitions, the company acquired the well-known brand Sanxitang in 2022. Through resource empowerment and management output, the revenue and customer numbers of Sanxitang have had a compound annual growth rate of 39.1% and 33.66%, respectively, since the acquisition. The quality of the acquired targets is high, and the post-acquisition integration has quickly demonstrated synergy in financial performance, leading to new stable internal growth. In 2024, the company acquired Shanghai Chengzhitang, further expanding its business footprint in Shanghai. On the other hand, through self-built expansion networks, the company has already self-built three medical institutions using a light asset approach, namely Beijing Tongrentang Internet Hospital, Qiqihar Beijing Tongrentang Traditional Chinese Medicine Hospital, and Shunyi Beijing Tongrentang Traditional Chinese Medicine Hospital in Beijing. Information disclosed indicates that these self-built medical institutions provide online traditional Chinese medicine medical services, depth of integration of traditional Chinese and Western medicine, and deployment of high-end medical services. Furthermore, the accelerator for this expansion is the output of management services. According to its disclosures on the use of raised funds, the company plans to expand by one managed medical institution per year, but from 2024 to the present, the number of managed medical institutions has increased by five. By providing services to public hospitals and expanding to multiple provinces in the short term, the company has significantly reduced customer acquisition costs. By deeply integrating with regional institutions, it has the potential to establish a multi-tier medical network in the region. Strong physician team, high growth in customer visits If the brand represents the "face" of Beijing Tongrentang Healthcare, then the physician team represents the "substance" - the core asset of the company that is truly irreplaceable. The client visits to the company's traditional Chinese medicine healthcare service network have maintained a high level of growth. The offline network of medical institutions mainly consists of 24 self-owned and managed medical institutions, with client visits showing double-digit growth. In the first three quarters of 2025, there were 2.3016 million client visits, a 24.5% year-on-year increase. The client visits to the internet hospital exploded from 2022 to 2024, with 234,200 client visits in the first three quarters of 2025. The growth in client visits (24.5%) is significantly higher than the growth in revenue, which is an important observation - it indicates that the company is in the strategic investment period of "attracting customers first, then providing value," rapidly expanding its customer base as a solid foundation for future increases in unit prices and service extensions. According to disclosed information, the development of the physician team in terms of quality and scale is as follows: Increasing numbers: From 2022 to September 2025, the number of practicing physicians increased from 643 to 1,699 for offline facilities and from 386 to 1,375 for online facilities. Prominence of senior titles: There are 320 chief physicians, 487 associate chief physicians, and around 30% and 35% of them are qualified as high-level and mid-level physicians, respectively. Leading traditional Chinese medicine experts: 2 experts in national famous Chinese medicine expert inheritance studio, 13 instructors in the inheritance of national old Chinese medicine expert academic experience, 10 experts with special allowance from the State Council, and 5 representatives of intangible cultural heritage inheritors (including 2 national-level representatives). Leading in Beijing: 9 national traditional Chinese medicine masters in the capital, 4 well-known traditional Chinese medicine experts in the capital. It is worth mentioning that the physician team of Beijing Tongrentang Healthcare is gradually expanding, with an increase in employee costs. However, the company continues to optimize other costs, reducing costs and increasing efficiency, leading to a stable increase in gross profit margin, which was 15.7%, 18.9%, 18.9%, and 18.2% from 2022 to the first three quarters of 2025. During the same period, the expense ratio was on a declining trend, reaching 13.6% in the first three quarters of 2025, a decrease of 3.47 percentage points compared to 2022. Industry leader status combined with Hong Kong listing is likely to be well received Regardless of the form of expansion, a strong physician team, brand reputation, and customer recognition are truly the cornerstones of a healthcare institution's sustainable development. Of course, the company has strong financials, with the proportion of interest-bearing debt in 2025 only accounting for 11.56%, and holding 225 million yuan in cash and cash equivalents, providing financial security for internal and external expansion, as well as physician investment. From an industry perspective, compared to Western medicine, traditional Chinese medicine has fewer side effects, focuses more on prevention and long-term health management, particularly in the management of chronic diseases and the treatment of complex and difficult-to-treat illnesses. The aging population will drive the expansion of traditional Chinese medicine services. According to Frost & Sullivan, the market size for traditional Chinese medicine service providers created a total revenue of 1.016 trillion yuan in 2024, with a compound annual growth rate of 8.7% in the past five years, and is expected to reach 1.6205 trillion yuan by 2029, with a compound annual growth rate of 9.9%. As a leader in the industry, Beijing Tongrentang Healthcare, whether based on outpatient visits, inpatient visits, or traditional Chinese medicine service revenue, leads the way in traditional Chinese medicine healthcare services in China's private sector. Furthermore, the "Beijing Tongrentang" brand is one of the few national brands with a history of over 350 years, standing tall through the passage of time, demonstrating its enduring strength and influence. If the above three logics explain why Beijing Tongrentang Healthcare is worth investing in, then the AI + traditional Chinese medicine answer a larger question - where is the ceiling for the growth of traditional Chinese medicine healthcare services? It is worth noting that as mentioned earlier, Beijing Tongrentang Healthcare is the only core segment of Beijing Tongrentang Group that strategically focuses on traditional Chinese medicine healthcare services, as well as being the core carrier for the implementation of AI + traditional Chinese medicine by Beijing Tongrentang. This opens up room for the company's growth. In recent years, Beijing Tongrentang Group has actively promoted the application of AI + traditional Chinese medicine on the ground. On the one hand, in intelligent factory scenarios, it fully AIizes with its 20-year strategic partner, Yonyou, to create a digital factory based on AIoT platform. On the other hand, it actively collaborates with leading AI companies, such as working with Xiaomi Business Marketing to create an "AI Smart Traditional Chinese Medicine Health Service Intelligence System," deeply integrating traditional Chinese medicine wisdom with modern AI technology. In January 2026, the Beijing Municipal Bureau of Economy and Information Technology signed a mission contract with Beijing Tongrentang, supporting the implementation of the "Artificial Intelligence Traditional Chinese Medicine New Drug Development Platform Basic Capability Construction" project by Beijing Tongrentang. This signifies that Beijing Tongrentang has already taken the lead in implementing AI + traditional Chinese medicine, synchronizing policy, technology, and market advancement. Beijing Tongrentang Healthcare is expected to accelerate the full AI transformation of its core businesses, including traditional Chinese medicine healthcare services, and fully benefit from the market dividends of the AI + traditional Chinese medicine track. Overall, Beijing Tongrentang Healthcare, with its multi-drive development model, steady growth in performance, healthy cash flow, and high financial safety margin, if it continues to maintain this growth strategy, and by exploring the traditional Chinese medicine + model, expands its services to more regions, there is a high likelihood of seeing a consolidating trend in the trillion-yuan scale traditional Chinese medicine healthcare industry. The well-known "Beijing Tongrentang" brand, the company's strong physician team, stable development foundation, and expectations for continued high levels of customer visits and service, as well as being the core carrier of the AI + traditional Chinese medicine track for Beijing Tongrentang Group, all contribute to the potential benefits of the company from this race. The investment value of Beijing Tongrentang Healthcare can be summarized in one sentence: in a trillion-yuan, high-growth, highly diversified track, a leading company with a 350-year-old brand barrier and industry-leading market share, is embracing the AI era with standardization chains and resource barriers.