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公司报告业绩分析国药控股 (1099 HK) 持续改革以稳定增长国药控股于 8 月 22 日公布总体盈利和核心净利润分别为人民币 25.29 亿 ( 同比升 32%) 及 25 亿 ( 同比升 35%), 较我们预期高 17% 及 8%, 原因是融资成本和税率下降 16 第 2 季盈利同比跃升 43% 至人民币 13.20 亿, 较我们预期高 16% 正如先前所述, 我们认为国企改革将可改善经营成本模式, 带来更多并购机会基于利息成本下降, 我们轻微上调 16-18 财年的利润预测 4%/1%/1% 目标价由 40.20 港元上调至 43.00 港元, 上升空间 8%, 评级由买入下调至中性中国医疗保健卫生保健设施 / 服务 2016 年 8 月 23 日中性目标价上次评级 / 目标价收盘价 (22 Aug 16) HKD43.00 买入 HKD40.20 HKD39.70 Upside/downside (%) 8.3 恒生指数 22997.91 总市值 (HKDb/USDb) 110/14.2 52 周最高 / 最低 (HKD) 24.60-42.50 日均成交额 (USDm) 19.29 流通量 (%) 资料来源 : 彭博医院门诊病人支撑零售药店销售 16 上半年总收益为人民币 1,260 亿 ( 同比升 13%), 符合我们预测其中, 药物分销收益为人民币 1,180 亿 ( 同比升 13%), 与我们预测一致 ; 零售药店销售为人民币 48.73 亿, 较我们预期高 4%, 但药店数目为 3,268 家, 少于我们预期的 3,357 家 (15 上半年 :2,932 家 ) 我们上调 16 下半年的零售销售预测 3%, 以反映药店数目及每店销售的增长, 此外, 更多医院门诊病人从医院转往邻近药店购买处方药物 ( 处方外流 ), 也有助药店销售股价表现 HKD 38.0 33.0 28.0 170% 150% 130% 110% 收益增长放缓, 但预期较同业快然而, 我们预测 16 财年的全年收益增长维持于同比升 13% 的水平, 较我们先前预测的 18% 为低, 但有望高于同业的 12% 这主要是由于 :(1) 医院向分销商的付款较慢及 (2) 招标减少及第二次议价增加拖慢药品招标因此, 我们下调 16-18 财年的总收益预测 3%-6% 加大成本改革以稳定增长值得注意的是,16 上半年融资成本由去年同期人民币 12 亿减少至 9.99 亿, 远低于我们估计的 12 亿根据我们的计算, 实际利率由去年同期 3.8% 下降至 3.2% 我们预期国药将可维持融资成本于较低水平, 因此下调 16-18 财年的利息成本预测 19%/20%/18%, 并且相应上调核心利润预测,16 财年上调 4%,17-18 财年各年上调 1% 将连锁零售药店纳入国药集团一致药业 (000028.CH, 未评级 ) 旗下, 有助梳理国药的零售平台架构, 增加并购机会目标价由 40.20 港元上调至 43.00 港元, 但降级至中性我们将按分部总和计算估值的基础年向前滚动至 17 财年, 目标价上调至 43.00 港元, 相当于 17 财年预测市盈率 19.3 倍 ( 上调前 :19.4 倍 ), 上升空间 8%, 评级由买入下调至中性上行风险 :(1) 较富庶省份的药品销售毛利率提升 ;(2) 更多医院门诊病人转移到零售药店购买药品下行风险 : (1) 药品或设备招标延误或规模缩减 ;(2) 国企改革步伐放缓 ;(3) 利率回升图 1: 盈利预测截至 Dec 31 ( 人民币百万 ) FY14A FY15A FY16F FY17F FY18F 营业额 200,131 227,069 256,913 293,234 335,706 净利润 2,875 3,761 4,692 5,246 5,910 实际盈利 2,885 3,758 4,651 5,246 5,910 每股实际盈利 (RMB) 1.116 1.358 1.681 1.896 2.136 每股股息 (RMB) 0.33 0.41 0.51 0.57 0.64 市盈率 30.5 25.1 20.3 18.0 16.0 股息率 (%) 1.0 1.2 1.5 1.7 1.9 市净率 3.22 3.14 2.60 2.13 1.73 净债务与股本 (%) 36.8 13.6 11.9 0.5 (9.6) 每股实际盈利增长 (%) 24.9 21.7 23.8 12.8 12.6 资料来源 : 国信证券 ( 香港 ) 研究部 23.0 Aug-14 Apr-15 Dec-15 Price(LHS) 股票数据 1M 3M 12M 绝对回报 (%) 7.3 11.4 47.0 绝对回报 (USD, %) 7.4 11.6 47.0 相对 HSI 回报 (%) 2.6 (4.5) 44.4 资料来源 : 彭博公司简介国药控股股份有限公司是中国最大的医疗产品分销商, 2014 年市占率为 13.1%, 现时旗下子公司超过 300 家, 分销网络覆盖 31 个省 176 个城市香港上市 H 股目前持有 (1) 其 A 股 (600511.CH, 未评级 )44.0% 股权 ; 及 (2) 国药集团一致药业股份有限公司 (000028.CH, 未评级 )51.0% 股权, 两者分别占国药控股 H 股盈利约 7% 及 10% 资料来源 : 彭博萧智舜 PhD 证监会中央编号 :AVV237 +852 2899 6747 jason.siu@guosen.com.hk Rel. to HSI(RHS) 90% 研究报告仅代表分析员个人观点, 请务必阅读正文之后的免责声明 1

Figure 2 SOTP valuation FY17F FY17F Equity value TP (HKD) Core business GPM FY17 EPS (HKD) Valuation basis Target P/E x (HKD m) Pharmaceutical distribution 6.9% 1.380 FY17F EPS x target P/E (FY17F) 22.3 85,125 64.4% 30.76 64.4% (0.5SD above past five year forward P/E mean) Retail pharmacy 26.5% 0.222 DCF method (End-FY17F; 10-yr) WACC=9.9%; g=3.0% 25.2 15,465 11.7% 5.59 11.7% (Temasek acquired Watson's 25% stakes at 23.7x FY13 P/E) Other business 44.3% 0.153 FY17F EPS x target P/E (FY16F) 15.8 6,701 5.1% 2.42 5.1% (~ healthcare sector mean) Internet sales 16.0% 0.038 DCF method (End-FY17F; 10-yr) WACC=9.9%; g=3.0% 39.4 4,119 3.1% 1.49 3.1% Sub-total 8.2% 26.3 111,410 84.3% 40.26 84.3% China National Medicine Corp (600511.CH, Non-rated) 0.139 FY17F EPS x target P/E (FY17F) 22.3 8,567 6.5% 3.10 6.5% (similar to its H-share core business) China National Accord Medicine Corp (000028.CH, Non-rated) 0.198 FY17F EPS x target P/E (FY16F) 22.3 12,239 9.3% 4.42 9.3% (similar to its H-share core business) Sub-total 2.129 132,216 15.7% 47.78 15.7% Source: Guosen Securities(HK) Research 10% discount to overall total Target Price FY16F P/E 19.3 125,605 100.0% 43.00 TP Figure 3 Changes in half yearly sales forecast Guosen Actual Old New Year Ended Dec (RMB m) 1H14 2H14 1H15 2H15 1H16F 1H16 Diff 2H16F 2H16F Diff Revenue breakdown Pharmaceutical distribution 89,985 100,148 104,718 112,763 118,622 118,674 0% 132,209 123,916-6% Y-o-y change 18.6% 22.1% 16.4% 12.6% 13.3% 13.3% 0% 17.2% 9.9% -7% % to total revenue 94.9% 95.1% 94.3% 97.2% 94.4% 94.3% 0% 95.0% 94.6% 0% Retail pharmacy 2,798 3,104 4,095 4,620 4,702.8 4,873 4% 4,825 4,958 3% Y-o-y change 23.0% 21.3% 46.3% 48.8% 14.8% 19.0% 4% 4.4% 7.3% 3% % to total revenue 3.0% 2.9% 3.7% 4.0% 3.7% 3.9% 0% 3.5% 3.8% 0% Other business operations 2,052 2,044 2,245 2,116 2,312 2,341 1% 2,179 2,151-1% Y-o-y change 5.9% -8.4% 9.4% 3.5% 3.0% 4.3% 1% 3.0% 1.7% -1% % to total revenue 2.2% 1.9% 2.0% 1.8% 1.8% 1.9% 0% 1.6% 1.6% 0% Total revenue 94,836 105,296 111,057 116,012 125,637 125,888 0% 139,213 131,025-6% Y-o-y change 18.4% 21.3% 17.1% 10.2% 13.1% 13.4% 0% 20.0% 12.9% -7% Source: Company data; Guosen Securities(HK) Research Figure 4 Changes in annual sales forecast Old New Old New Old New Year Ended Dec (RMB m) FY15F FY16F FY16F Diff FY17F FY17F Diff FY18F FY18F Diff Revenue breakdown Pharmaceutical distribution 213,994 250,831 242,589-3% 291,740 277,308-5% 338,523 317,658-6% Y-o-y change 12.5% 17.2% 13.4% -3.9% 16.3% 14.3% -2.0% 16.0% 14.6% -1.5% % total revenue 94.2% 94.7% 94.4% -0.3% 94.8% 94.6% -0.2% 94.9% 94.6% -0.3% Retail pharmacy 8,715 9,528 9,832 3% 11,412 11,255-1% 13,421 13,236-1% Y-o-y change 47.7% 9.3% 12.8% 3.5% 19.8% 14.5% -5.3% 17.6% 17.6% 0.0% % total revenue 3.8% 3.6% 3.8% 0.2% 3.7% 3.8% 0.1% 3.8% 3.9% 0.2% Other business operations 4,361 4,492 4,492 0% 4,671 4,671 0% 4,812 4,812 0% Y-o-y change 6.5% 3.0% 3.0% 0.0% 4.0% 4.0% 0.0% 3.0% 3.0% 0.0% % total revenue 1.9% 1.7% 1.7% 0.1% 1.5% 1.6% 0.1% 1.3% 1.4% 0.1% Total revenue 227,069 264,850 256,913-3% 307,824 293,234-5% 356,755 335,706-6% Y-o-y change 13.5% 16.6% 13.1% -3.5% 16.2% 14.1% -2.1% 15.9% 14.5% -1.4% Source: Company data; Guosen Securities(HK) Research Guosen Securities (HK) 2

Figure 5 Changes in 2Q15 result forecast Guosen Actual Guosen Actual Year Ended Dec (RMB m) 1Q15 2Q15 1H15 2H15 1Q16 2Q16F 2Q16 Diff 1H16F 1H16 Diff Total revenue 55,152 55,906 111,057 119,499 62,581 63,056 63,307 0% 125,637 125,888 0% Y-o-y change 20.4% 14.0% 17.1% 13.5% 13.5% 10.2% 10.6% 13.1% 13.4% Costs of sales (50,645) (51,274) (101,918) (110,020) (57,534) (57,970) (58,131) 0% (115,504) (115,665) 0% Gross Profit 4,507.0 4,632.2 9,139.2 9,478.3 5,047.4 5,085.7 5,176.0 2% 10,133.1 10,223.4 1% GPM 8.2% 8.3% 8.2% 7.9% 8.1% 8.1% 8.2% 0.1% 8.1% 8.1% 0.1% Y-o-y change 18.6% 14.2% 16.3% 11.9% 12.0% 9.8% 11.7% 1.9% 10.9% 11.9% 1.0% Other income 0.0 83.9 83.9 159.8 0.0 167.6 76.5-54% 167.6 76.5-54% Distribution and selling expenses (1,420) (1,428) (2,849) (3,149) (1,561) (1,580) (1,574) 0% (3,141) (3,135) 0% selling expenses to sales ratio 2.6% 2.6% 2.6% 2.6% 2.5% 2.5% 2.5% 2.5% 2.5% Y-o-y change 21.3% 17.6% 19.4% 15.0% 6.3% -4.4% -4.8% 10.3% 10.1% General and administrative cost (894) (859) (1,753) (1,942) (1,037) (1,009) (940) -7% (2,046) (1,977) -3% Admin cost to sales ratio 1.6% 1.5% 1.6% 1.6% 1.7% 1.6% 1.5% -0.1% 1.6% 1.6% -0.1% Y-o-y change 13.4% 0.7% 6.8% 1.9% 13.8% 22.9% 14.5% -8.4% 16.7% 12.8% -4.0% Operating profit (reported) 2,193 2,345 4,538 4,388 2,449 2,497 2,662 7% 4,946 5,112 3% OPM (reported) 4.0% 4.2% 4.1% 3.7% 3.9% 4.0% 4.2% 0.2% 3.9% 4.1% 0.1% Y-o-y change 19.1% 17.9% 18.5% 14.6% 4.3% 15.8% 23.5% 7.7% 9.0% 12.6% 3.6% Other gains - net (33) 100 68 (5) (12) 24 439 1741% 12 427 3495% Finance income 0 0 124 117 0 185 109 N/A 185 109 N/A finance costs 0 0 (1,151) (1,078) 0 (826) (590) N/A (1,235) (999) N/A Finance costs - net (413) (614) (1,027) (960) (410) (640) (481) -25% (1,050) (891) -15% Share of results of associates 0 91 91 74 0 89 105 18% 89 105 18% Profit before tax 1,748 2,006 3,754 3,656 2,028 2,137 2,801 31% 4,165 4,829 16% Tax expense (404) (461) (865) (848) (474) (493) (625) 27% (966) (1,099) 14% Tax rate 23.1% 23.0% 23.0% 23.2% 23.4% 23.1% 22.3% -0.7% 23.2% 22.7% -0.5% Net profit after minority interests 895 1,019 1,914 1,847 1,020 1,138 1,509 33% 2,158 2,529 17% MI 449 526 975 961 534 507 667 32% 1,041 1,201 15% Y-o-y change 27.6% 33.4% 30.6% 31.0% 8.9% 11.7% 48.2% 36.5% 12.7% 32.2% 19.4% Underlying net profit 990 921 1,911 1,847 1,169 1,138 1,320 16% 2,307 2,500 8% Net margin (underlying) 1.8% 1.6% 1.7% 1.5% 1.9% 1.8% 2.1% 16% 1.8% 2.0% 8% Y-o-y change 33.0% 29.1% 31.1% 31.0% 18.0% 37.6% 59.6% 22.0% 20.7% 35.4% 14.7% q-o-q change 88.6% -7.0% N/A N/A 64.0% -2.6% 12.9% N/A N/A Y-o-Y change Total revenue 20.4% 14.0% 17.1% 13.5% 13.5% 12.8% 13.2% 0.4% 13.1% 13.4% 0.2% Gross Profit 18.6% 14.2% 16.3% 11.9% 12.0% 9.8% 11.7% 1.9% 10.9% 11.9% 1.0% Distribution and selling expenses 21.3% 17.6% 19.4% 15.0% 9.9% 10.6% 10.2% -0.4% 10.3% 10.1% -0.2% General and administrative cost 13.4% 0.7% 6.8% 1.9% 16.1% 17.4% 9.4% -8.1% 16.7% 12.8% -4.0% Underlying net profit 33.0% 29.1% 31.1% 31.0% 18.0% 23.5% 43.3% 19.7% 20.7% 30.8% 10.1% % to Sales Total revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% Gross Profit 8.2% 8.3% 8.2% 7.9% 8.1% 8.1% 8.2% 0.1% 8.1% 8.1% 0.1% Distribution and selling expenses 2.6% 2.6% 2.6% 2.6% 2.5% 2.5% 2.5% 0.0% 2.5% 2.5% 0.0% General and administrative cost 1.6% 1.5% 1.6% 1.6% 1.7% 1.6% 1.5% -0.1% 1.6% 1.6% -0.1% Profit before tax 3.2% 3.6% 3.4% 3.1% 3.2% 3.4% 4.4% 1.0% 3.3% 3.8% 0.5% Underlying net profit 1.8% 1.6% 1.7% 1.5% 1.9% 1.8% 2.1% 0.3% 1.8% 2.0% 0.2% Source: Company data; Guosen Securities(HK) Research Guosen Securities (HK) 3

Figure 6 Changes in annual P&L forecast Old New Old New Old New Year Ended Dec (RMB m) FY15 FY16F FY16F Diff FY17F FY17F Diff FY18F FY18F Diff Total revenue 227,069 264,850 256,913-3% 307,824 293,234-5% 356,755 335,706-6% Y-o-y change 13.5% 17.6% 13.1% 16.2% 14.1% 15.9% 14.5% Cost of sales (208,452) (243,124) (235,953) -3% (282,722) (269,159) -5% (327,896) (308,295) -6% Gross profit 18,618 21,726 20,960-4% 25,101 24,075-4% 28,859 27,411-5% Y-o-y change 14.0% 16.1% 12.6% -3.5% 15.5% 14.9% -0.7% 15.1% 13.9% -1.2% GPM 8.2% 8.2% 8.2% 0.0% 8.2% 8.2% 0.1% 8.1% 8.2% 0.1% Other income 244 318 308-3% 372 355-5% 430 405-6% Distribution and selling expenses (5,998) (6,619) (6,526) -1% (7,693) (7,477) -3% (8,990) (8,460) -6% % to total revenue 2.6% 2.5% 2.5% 0.0% 2.5% 2.5% 0.1% 2.5% 2.5% 0.0% General & administrative costs (3,695) (4,449) (4,188) -6% (5,171) (4,838) -6% (6,358) (5,539) -13% % to total revenue 1.6% 1.7% 1.6% -0.1% 1.7% 1.7% 0.0% 1.8% 1.7% -0.1% Operating profit 8,925 10,658 10,247-4% 12,237 11,760-4% 13,511 13,412-1% Y-o-y change 16.6% 16.9% 14.8% -2.1% 14.8% 14.8% -0.1% 15.0% 14.0% -1.0% Operating margin 3.9% 4.0% 4.0% 0.0% 4.0% 4.0% 0.0% 3.8% 4.0% 0.2% Other gains - net 62 21 288 1265% 19 20 6% 25 18-29% Finance income 241 325 227-30% 357 299-16% 655 341-48% Finance costs (2,228) (2,673) (2,175) -19% (2,844) (2,262) -20% (2,840) (2,334) -18% Finance costs- net (1,987) (2,349) (1,947) -17% (2,487) (1,963) -21% (2,185) (1,993) -9% Share of results of associates (unlisted) 165 184 178-3% 201 194-3% 214 214 0% Earnings before tax (reported) 7,410 8,833 9,074 3% 10,343 10,366 0% 11,995 12,055 0% Tax expenses (1,713) (2,014) (2,069) 3% (2,327) (2,332) 0% (2,759) (2,773) 0% Tax rate 23.1% 22.8% 22.8% 0.0% 22.5% 22.5% 0.0% 23.0% 23.0% 0.0% Net profit after MI (Reported) 3,761 4,475 4,692 5% 5,191 5,246 1% 5,863 5,910 1% MI 1,936 2,344 2,313-1% 2,825 2,787-1% 3,373 3,373 0% Y-o-y change 30.8% 18.6% 24.8% 6.2% 16.0% 11.8% -4.2% 12.9% 12.6% -0.3% 0 Underlying net profit 3,758 4,475 4,651 4% 5,191 5,246 1% 5,863 5,910 1% Net margin (underlying) 1.7% 1.7% 1.8% 0.1% 1.7% 1.8% 0.1% 1.6% 1.8% 0.1% Y-o-y change 31.1% 12.4% 23.8% 11.4% 16.0% 12.8% -3.2% 12.9% 12.6% -0.3% Core EPS (in RMB) 1.358 1.617 1.681 4% 1.876 1.896 1% 2.119 2.136 1% Y-o-y change 22.5% 12.4% 23.8% 11.4% 16.0% 12.8% -3.2% 12.9% 12.6% -0.3% Total Dividend 1,135 1,339 1,404 5% 1,557 1,574 1% 1,759 1,773 1% DPS (Total) (in RMB) 0.410 0.484 0.507 5% 0.563 0.569 1% 0.636 0.641 1% Dividend payout ratio 30.2% 29.9% 30.2% 0.3% 30.0% 30.0% 0.0% 30.0% 30.0% 0.0% Y-o-Y change Total revenue 13.5% 17.6% 13.1% -4.4% 16.2% 14.1% -2.1% 15.9% 14.5% -1.4% Gross profit 14.0% 16.1% 12.6% -3.5% 15.5% 14.9% -0.7% 15.1% 13.9% -1.2% Distribution and selling expenses 17.1% 13.9% 8.8% -5.1% 16.2% 14.6% -1.6% 14.5% 13.1% -1.4% General & administrative costs 4.1% 17.6% 13.3% -4.2% 16.2% 15.5% -0.7% 15.9% 14.5% -1.4% Underlying net profit 31.1% 12.4% 23.8% 11.4% 16.0% 12.8% -3.2% 12.9% 12.6% -0.3% % to Sales Total revenue 100.0% 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% Gross profit 8.2% 8.2% 8.2% 0.0% 8.2% 8.2% 0.1% 8.1% 8.2% 0.1% Distribution and selling expenses 2.6% 2.5% 2.5% 0.0% 2.5% 2.5% 0.1% 2.5% 2.5% 0.0% General & administrative costs 1.6% 1.7% 1.6% -0.1% 1.7% 1.7% 0.0% 1.8% 1.7% -0.1% Earnings before tax (reported) 3.3% 3.3% 3.5% 0.2% 3.4% 3.5% 0.2% 3.4% 3.6% 0.2% Underlying net profit 1.7% 1.7% 1.8% 0.1% 1.7% 1.8% 0.1% 1.6% 1.8% 0.1% Source: Company data; Guosen Securities(HK) Research Guosen Securities (HK) 4

Share Price (HK$) Sinopharm (1099 HK) Figure 7 Past five year forward P/E band 55 50 45 40 35 +2SD = 31.2x +1SD = 24.9X Mean = 18.5x 30 25 20-1SD = 13.8x 15 10-2SD = 9.1x 5 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Source: Bloomberg, Guosen Securities(HK) Research Figure 8 Past 5 years forward P/E curve for Sinopharm H-share (1099.HK) Forward P/E 26.0 24.0 22.0 +2SD= 22.0x 20.0 +1SD= 19.8x 18.0 Mean= 17.7x 16.0 14.0 12.0-1SD= 15.5x -2SD= 13.3x 10.0 Source: Bloomberg, Guosen Securities(HK) Research Guosen Securities (HK) 5

Figure 9 Valuation comparables for HK-listed healthcare distributor sector Company Ticker Rating Price Mkt cap (US$m) 3-mth avg t/o (US$m) PER Hist PER FY1 PER FY2 Hist (%) FY1 (%) P/B Hist P/B FY1 Adjusted sector median* 19.4 15.0 13.6 1.2 1.9 1.9 N/A Sinopharm-H 1099 HK BUY 39.70 14,169 19.3 25.0 21.2 18.4 1.2 N/A 3.01 N/A Shanghai Pharm-H 2607 HK Non-rated 20.25 7,655 3.4 16.2 14.7 13.3 1.9 N/A 1.51 N/A Baiyunshan Ph-H 874 HK Non-rated 19.02 6,000 2.4 16.2 15.0 13.6 N/A N/A 2.27 N/A Kingworld 1110 HK Non-rated 1.25 100 0.0 22.6 14.7 10.9 1.2 1.9 1.13 N/A * Outliners and "N/A" entries are in red and excl. from the calculation of averages Source: Bloomberg data, Guosen Securities(HK) Research (priced after the market close on 22 Aug 2016) Figure 10 Valuation comparables for China A-share healthcare distributor sector Company Ticker Rating Price Mkt cap (US$m) 3-mth avg t/o (US$m) PER Hist PER FY1 PER FY2 Hist (%) FY1 (%) P/B Hist P/B FY1 Adjusted sector median* 29.4 21.7 20.1 0.5 N/A 4.6 3.6 China National-A 600511 CH Non-rated 31.54 2,270 8.5 29.4 N/A N/A 0.3 N/A 7.31 4.63 Shang Pharm -A 601607 CH Non-rated 19.55 7,648 30.5 18.3 16.6 14.7 1.7 N/A 1.85 1.70 Guangzhou Baiy-A 600332 CH Non-rated 25.82 5,994 36.9 25.6 21.7 20.1 N/A N/A 4.90 3.59 Nanjing Pharma-A 600713 CH Non-rated 8.83 1,191 15.1 50.5 N/A N/A 0.2 N/A 4.58 3.37 Jointown Pharm-A 600998 CH Non-rated 19.79 4,899 16.0 46.7 38.8 31.3 0.7 N/A 4.31 3.67 * Outliners and "N/A" entries are in red and excl. from the calculation of averages Source: Bloomberg data, Guosen Securities(HK) Research (priced after the market close on 22 Aug 2016) Figure 11 Valuation comparables for China A-share retail and chain drugstores sector Company Ticker Rating Price Mkt cap (US$m) 3-mth avg t/o (US$m) PER Hist PER FY1 PER FY2 Hist (%) FY1 (%) P/B Hist P/B FY1 Adjusted sector median* 51.7 42.9 36.1 0.7 N/A 5.9 4.8 Beijing Tongre-A 600085 CH Non-rated 31.20 6,431 44.9 48.4 42.6 37.6 0.7 N/A 5.80 N/A Cachet Pharmac-A 002462 CH Non-rated 37.55 1,414 15.2 52.2 38.8 29.6 0.7 N/A 5.02 4.80 Laobaixing Pha-A 603883 CH Non-rated 50.32 2,019 17.0 51.3 43.3 34.7 0.6 N/A 6.06 N/A Yifeng Pharma-A 603939 CH Non-rated 34.82 1,898 7.6 60.7 49.5 38.8 0.7 N/A 7.89 N/A * Outliners and "N/A" entries are in red and excl. from the calculation of averages Source: Bloomberg data, Guosen Securities(HK) Research (priced after the market close on 22 Aug 2016) Guosen Securities (HK) 6

Summary financial statements(year to Dec 31) Profit & Loss (RMBm) FY14A FY15F FY16F FY17F FY18F Financial Ratios FY14A FY15F FY16F FY17F FY18F Revenue 200,131 227,069 256,913 293,234 335,706 Gross profit margin (%) 8.2 8.2 8.2 8.2 8.2 Revenue growth (%) 19.9 13.5 13.1 14.1 14.5 Operating profit margin (%) 3.8 3.9 4.0 4.0 4.0 Cost of sales (183,803) (208,452) (235,953) (269,159) (308,295 Underlying profit margin (%) 1.4 1.7 1.8 1.8 1.8 ) Gross profit 16,328 18,618 20,960 24,075 27,411 Net debt/equity (%) 36.8 13.6 11.9 0.5 (9.6) Other income/(expense) 0 0 0 0 0 Net debt/total assets (%) 7.8 3.0 2.6 0.1 (2.5) Operating expenses (8,670) (9,692) (10,713) (12,316) (13,999) Current ratio (%) 128 123 141 143 146 Operating profit 7,658 8,925 10,247 11,760 13,412 Dividend payout (%) 29.7 30.2 30.2 30.0 30.0 Operating profit growth (%) 31.7 16.6 14.8 14.8 14.0 Interest cover 3.3 4.0 4.7 5.2 5.7 Other non operating inc/(exp) 243 306 596 375 423 Dividend cover 3.4 3.3 3.3 3.3 3.3 Finance income 188 241 227 299 341 Acct. receivable turnover days 107.5 105.1 98.4 97.8 96.3 Finance expenses (2,317) (2,228) (2,175) (2,262) (2,334) Acct. payable turnover days 98.2 99.6 95.1 93.0 92.9 Associates & JCE 163 165 178 194 214 Inventory turnover days 36.7 37.3 35.6 34.6 34.6 Profit before taxation 5,935 7,410 9,074 10,366 12,055 Cash cycle days 46.1 42.8 39.0 39.4 38.1 Taxation (1,383) (1,713) (2,069) (2,332) (2,773) Dupont Analysis FY14A FY15F FY16F FY17F FY18F Non-controlling interests (1,677) (1,936) (2,313) (2,787) (3,373) Tax burden (%) 48.4 50.8 51.7 50.6 49.0 Net profit 2,875 3,761 4,692 5,246 5,910 Interest burden (%) 77.5 83.0 88.6 88.1 89.9 Other Adjustments on UP 10 (3) (41) 0 0 Operating profit margin (%) 3.8 3.9 4.0 4.0 4.0 Underlying Profit 2,885 3,758 4,651 5,246 5,910 Asset turnover 1.7 1.7 1.7 1.7 1.7 Underlying profit growth (%) 28.0 30.3 23.8 12.8 12.6 Leverage ratio 4.8 4.6 4.6 4.4 4.0 EPS (RMB) 1.112 1.359 1.696 1.896 2.136 ROA (%) 2.5 2.8 3.1 3.0 3.0 Underlying EPS (RMB) 1.116 1.358 1.681 1.896 2.136 ROE (%) 11.7 13.1 14.2 13.0 12.0 Underlying EPS growth (%) 24.9 21.7 23.8 12.8 12.6 DPS (RMB) 0.33 0.41 0.51 0.57 0.64 Source: Guosen Securities (HK) Research Source: Guosen Securities (HK) Research Balance Sheet (RMBm) FY14A FY15F FY16F FY17F FY18F Cashflow (RMBm) FY14A FY15F FY16F FY17F FY18F Fixed assets 7,102 7,641 8,051 8,357 8,674 Operating profit 5,935 7,410 9,074 10,366 12,055 Associates & JCE 930 1,133 1,190 1,250 1,312 Depreciation & amortization 738 837 906 976 1,049 Others 10,351 12,740 12,805 13,852 14,911 Interest expense 0 0 0 0 0 Non-current assets 18,383 21,515 22,046 23,458 24,898 Change in working capital (2,033) 4,992 (3,526) (3,197) (4,116) Inventories 20,309 22,349 23,730 27,234 31,246 Tax paid (1,393) (1,771) (2,069) (2,332) (2,773) Debtors & prepayments 70,580 69,683 81,020 91,115 103,049 Other operating cashflow 2,314 2,093 2,003 2,086 2,158 Bank deposits & cash 19,384 24,721 39,833 45,479 52,587 Operating activities 5,561 13,560 6,387 7,899 8,373 Purchase of non-current assets Others 0 0 0 0 0 (1,451) (1,016) (1,439) (1,906) (2,014) (Capex) Current assets 110,272 116,752 144,583 163,828 186,882 Free cash flow 4,110 12,545 4,949 5,993 6,359 Bank & other borrowings 25,233 28,204 29,896 31,391 32,961 Disposal of non-current assets (25) 187 71 90 120 Trade & payables 54,724 59,038 63,933 73,187 83,682 Associates & JCE (net) (28) (109) 0 0 0 Taxation 558 584 600 676 804 Interest received 39 71 0 0 0 Others 5,506 6,857 8,162 9,320 10,667 Dividends received 97 105 126 151 181 Current liabilities 86,020 94,682 102,592 114,575 128,113 Other investing cashflow (1,880) (835) (14) (674) (454) Bank & other borrowings 4,223 608 14,264 14,317 14,380 Investing activities (3,248) (1,596) (1,255) (2,338) (2,167) Others 2,124 2,321 2,377 2,434 2,493 New loans raised 37,851 43,090 45,740 39,576 40,611 Non-current liabilities 6,346 2,929 16,641 16,751 16,873 Repayment of loans (39,035 (46,964 (37,740 (36,576 (36,611 ) ) ) ) ) Net assets 36,290 40,656 47,396 55,960 66,794 Dividends paid (1,079) (1,393) (1,585) (1,916) (2,098) Share capital 2,767 2,767 2,767 2,767 2,767 Other financing cashflow 2,284 (1,412) 3,566 (998) (999) Premium & reserves 24,615 27,285 33,495 41,502 51,751 Financing activities 22 (6,679) 9,980 86 902 Shareholders' funds 27,382 30,052 36,262 44,269 54,518 Inc/(dec) in cash 2,334 5,285 15,112 5,646 7,108 Non-controlling interests 8,908 10,604 11,134 11,691 12,276 Cash at beginning of year 17,045 19,384 24,721 39,833 45,479 Total equity 36,290 40,656 47,396 55,960 66,794 Foreign exchange effect 5 51 0 0 0 BVPS (RMB) 10.6 10.9 13.1 16.0 19.7 Cash at end of year 19,384 24,721 39,833 45,479 52,587 Source: Guosen Securities (HK) Research Source: Guosen Securities (HK) Research Guosen Securities (HK) 7

Information Disclosures Stock ratings, sector ratings and related definitions Stock Ratings: Buy: A return potential of 10 % or more relative to overall market within 6 12 months. Neutral: A return potential ranging from -10% to 10% relative to overall market within 6 12 months. Sell: A negative return of 10% or more relative to overall market within 6 12 months. Sector Ratings: Overweight: The sector will outperform the overall market by 10% or higher within 6 12 months. Neutral: The sector performance will range from -10% to 10% relative to overall market within 6 12 months. Underweight: The sector will underperform the overall market by 10% or lower within 6 12 months. Interest disclosure statement The analyst is licensed by the Hong Kong Securities and Futures Commission. Neither the analyst nor his/her associates serves as an officer of the listed companies covered in this report and has no financial interests in the companies. Guosen Securities (HK) Brokerage Co., Ltd. and its associated companies (collectively Guosen Securities (HK) ) has no disclosable financial interests (including securities holding) or make a market in the securities in respect of the listed companies. Guo sen Securities (HK) has no investment banking relationship within the past 12 months, to the listed companies. Guosen Securities (HK) has no individual employed by the listed companies. Disclaimers The prices of securities may fluctuate up or down. It may become valueless. It is as likely that losses will be incurred ra ther than profit made as a result of buying and selling securities. The content of this report does not represent a recommendation of Guosen Securities (HK) and does not constitute any buying/selling or dealing agreement in relation to the securities mentioned. Guosen Securities (HK) may be seeking or will seek investment banking or other business (such as placing agent, lead manager, sponsor, underwriter or proprietary trading in suc h securities) with the listed companies. Individuals of Guosen Securities (HK) may have personal investment interests in the listed companies. This report is based on information available to the public that we consider reliable, however, the authenticity, accuracy or completeness of such information is not guaranteed by Guosen Securities (HK). This report does not take into account the particular investment objectives, financial situation or needs of individual clients and does not constitute a personal investment recommendation to anyone. Clients are wholly responsible for any investment decision based on this report. Clients are advised to consider whether any advice or recommendation contained in this report is suitable for their particular circumstances. This r eport is not intended to be an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. This report is for distribution only to clients of Guosen Securities (HK). Without Guosen Securities (HK) s written authoriza tion, any form of quotation, reproduction or transmission to third parties is prohibited, or may be subject to legal action. Such information and opinions contained therein are subject to change and may be amended without any notification. This report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guose n Securities (HK) and its group companies to any registration or licensing requirement within such jurisdiction. Guosen Securities (HK) 8

信息披露公司评级行业评级及相关定义公司评级买入 : 我们预计未来 6-12 个月内, 个股相对大盘涨幅在 10% 以上 ; 中性 : 我们预计未来 6-12 个月内, 个股相对大盘涨幅介于 -10% 与 10% 之间 ; 减持 : 我们预计未来 6-12 个月内, 个股相对大盘跌幅大于 10% 行业评级超配 : 我们预计未来 6-12 个月内, 行业整体回报高于市场整体水平 10% 以上 ; 中性 : 我们预计未来 6-12 个月内, 行业整体回报介于市场整体水平 -10% 与 10% 之间 ; 低配 : 我们预计未来 6-12 个月内, 行业整体回报低于市场整体水平 10% 以上利益披露声明报告作者为香港证监会持牌人士, 分析员本人或其有联系者并未担任本研究报告所评论的上市法团高级管理人员, 也未持有其任何财务权益本报告中, 国信证券 ( 香港 ) 经纪有限公司及其所属关联机构 ( 合称国信证券 ( 香港 )) 并无持有该公司须作出披露的财务权益 ( 包括持股 ), 在过去 12 个月内与该公司并无投资银行关系, 亦无进行该公司有关股份的庄家活动本公司员工均非该上市公司的雇员免责条款证券价格有时可能非常波动证券价格可升可跌, 甚至变成毫无价值买卖证券未必一定能够赚取利润, 反而可能会招致损失本研究报告内容既不代表国信证券 ( 香港 ) 的推荐意见, 也并不构成所涉及的个别股票的买卖或交易要约国信证券 ( 香港 ) 或其集团公司有可能会与本报告涉及的公司洽谈投资银行业务或其它业务 ( 例如配售代理牵头经办人保荐人包销商或从事自营投资于该股票 ) 国信证券 ( 香港 ) 不排除其员工有个人投资于本报告内所提及的上市法团报告中的资料均来自公开信息, 我们力求准确可靠, 但对这些信息的正确性公正性及完整性不做任何保证本报告没有考虑到个别客户特殊的投资目标财务状况或需要, 并不构成个人投资建议, 客户据此投资, 责任自负客户在阅读本研究报告时应考虑报告中的任何意见或建议是否符合其个人特定状况本报告并不存在招揽或邀约购买或出售任何证券的企图本报告仅向特定客户传送, 未经国信证券香港书面授权许可, 任何人不得引用转载以及向第三方传播, 否则可能将承担法律责任研究报告所载的资料及意见, 如有任何更改, 本司将不作另行通知在一些管辖区域内, 针对或意图向该等区域内的市民居民个人或实体发布公布供其使用或提供获取渠道的行为会违反该区域内所适用的法律或规例或令国信证券 ( 香港 ) 受制于任何注册或领牌规定, 则本研究报告不适用于该等管辖区域内的市民居民或身处该范围内的任何人或实体 Guosen Securities (HK) 9