On September 23, Jointown released a progress announcement on the application and issuance of public REITs for pharmaceutical warehousing and logistics infrastructure.

Industry insiders pointed out that if the subsequent process can be completed smoothly, Jointown will achieve "listing + 1", and realize the "double listing" of Jointown and public REITs. However, at present, this process is still in the stage of formally submitting application materials.

Jointown said that if the public REITs project is successfully issued, it is expected to increase net profit by no more than 700 million yuan. Jointown public REITs is expected to become the first domestic pharmaceutical logistics warehousing facility, as well as the first private enterprise in Hubei Province, to achieve the synergy and win-win of Jointown and public REITs "double listing" platform.

Jointown has about 3 million square meters of pharmaceutical logistics warehousing assets and supporting facilities that can be pooled. The pooled assets of the Jiuzhoutong Pharmaceutical Warehousing and Logistics Infrastructure Public REITs are pharmaceutical logistics and warehousing assets in Dongxihu District, Wuhan City. This asset was rated as one of the top ten "National Intelligent Warehousing and Logistics Demonstration Bases" in the country by the National Development and Reform Commission, the Ministry of Commerce and the China Federation of Logistics and Purchasing, with a total construction area of approximately 172,000 square meters.

Jiuzhoutong's public REITs project has a long history. On March 12, 2023, it held the 20th meeting of the fifth board of directors and the 14th meeting of the fifth board of supervisors, and reviewed and approved the "Proposal on the Company's Application for the Issuance of Public REITs for Pharmaceutical Warehousing and Logistics Infrastructure".

After entering 2024, the pace of public REITs has continued to accelerate, especially in pharmaceutical commercial companies. In addition to Jiuzhoutong, on March 14, China Resources Commercial REIT was successfully listed as the first batch of domestic consumer infrastructure public REITs.

The 20th National Congress of the Communist Party of China further proposed "optimizing the layout, structure, function and system integration of infrastructure, and building a modern infrastructure system". Public REITs can not only open up new financing channels for infrastructure construction, but also enrich new investment varieties in the financial market.

Some industry commentators pointed out that the first public REITs application in the pharmaceutical industry requires a technical job in asset valuation. The valuation of Jiuzhoutong's warehousing and logistics base must be accurate to attract investors.

REITs (real estate securitization) is one of Jiuzhoutong's important development strategies. In the first half of 2024, Jiuzhoutong achieved considerable revenue and net profit by promoting new products, new retail, new medical care, digitalization and REITs strategy implementation - revenue of 77.771 billion yuan and net profit attributable to the parent of 1.208 billion yuan.

In addition, in order to maximize the value of assets, Jiuzhoutong has also launched the Pre-REITs project to build a multi-level real estate equity capital operation platform of "public REITs + Pre-REITs".

In the latest semi-annual report of Jiuzhoutong, it is pointed out that the public REITs and Pre-REITs projects are progressing smoothly, and it is striving to complete the issuance and listing of public REITs and the successful issuance of the first Pre-REITs before October this year, revitalize assets, and reconstruct the asset-light operation business model.

Warehousing and logistics are one of the pharmaceutical distribution businesses of pharmaceutical commercial companies. The pharmaceutical distribution business of pharmaceutical commercial companies provides distribution, warehousing, logistics and other pharmaceutical supply chain value-added solutions and related services to pharmaceutical manufacturers/equipment manufacturers and dispensers such as hospitals, distributors and retail pharmacies.

With the advancement of the normalization of centralized procurement, the coverage of centralized procurement continues to expand, and the network coverage advantages of national distribution leaders are further highlighted.

Jiuzhoutong stated in its 2024 semi-annual report that its operating performance was mainly due to the smooth development of various businesses such as pharmaceutical distribution. Jiuzhoutong's pharmaceutical distribution business is extensive, including general agent brand promotion (CSO) business, pharmaceutical industrial assets and OEM business, Jiuzhoutong B2C e-commerce general agent general sales business, etc.

Specifically, in the first half of 2024, the revenue scale of Jiuzhoutong's general agent brand promotion (CSO) business reached 9.862 billion yuan, a year-on-year increase of 14.18%, and realized a gross profit of 1.191 billion yuan; the pharmaceutical industry's self-production and OEM business achieved sales revenue of 1.438 billion yuan, a year-on-year increase of 21.61%; as of the end of July, Haoyaoshi's self-operated and franchised pharmacies reached 24,387, and sales to franchise stores reached 2.419 billion yuan, a year-on-year increase of 47.32%; Jiuzhoutong's B2C e-commerce general agent sales business sales revenue was 496 million yuan; Yaojiujiu B2B e-commerce platform and retail e-commerce service platform business sales reached 8.784 billion yuan; digital logistics and supply chain solutions business achieved operating income of 471 million yuan, a year-on-year increase of 16.84%.

Looking at the pharmaceutical distribution business of major drug dealers in 2024, among them, Sinopharm Holdings' pharmaceutical distribution business sales revenue reached 226.494 billion yuan, a year-on-year increase of 0.47%, accounting for 74.1% of its overall revenue; Shanghai's pharmaceutical distribution business revenue was 127.031 billion yuan, a year-on-year increase of 6.90%; China Resources Pharmaceutical's pharmaceutical distribution revenue reached 105.882 billion yuan, accounting for 79.6% of its total revenue. The gross profit of the distribution business was 5.9%, a slight decrease of 0.2% from the same period last year.

In terms of distribution network business, the development of major drug dealers is different. Judging from the performance in the first half of 2024, Sinopharm Holdings' distribution business focuses on central areas, especially key areas such as Jiangsu, Zhejiang, Shanghai, Central China, North China, Guangdong and Guangxi; Shanghai's pharmaceutical distribution network covers 31 provinces, municipalities and autonomous regions across the country, of which 25 provinces, municipalities and autonomous regions across the country are directly covered through holding subsidiaries, covering more than 32,000 medical institutions of various types; China Resources Pharmaceutical continues to optimize its network layout and business structure; Jiuzhoutong continues to improve its full supply chain management and service capabilities.

As the industry concentration continues to increase, the four major pharmaceutical companies are constantly making changes. Mergers and acquisitions, retail business development, and medical device layout have become important measures for their transformation.

Today, Jointown has increased its layout in the field of logistics and warehousing facilities. If the public offering REITs of pharmaceutical warehousing and logistics infrastructure are successfully listed in the future, the impact on other pharmaceutical businesses will be further expanded.

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