Others News
- China Nepstar plansbig expansion
Date: 12-Nov-2007 Sources: (Shenzhen Daily)
SHENZHEN-BASED China Nepstar Chain Drugstore Ltd. plans hundreds of store openings next year and a move into Beijing in 2009, its chief executive told reporters Friday as its stock rose as much as 24 percent in its first day of trading.
In 2008, the largest drugstore chain in China 'will mainly focus on our existing cities,'CEO Qian Jiannong said through an interpreter during the interview.
He added that the company would consider acquisitions and planned to have 3,000 stores by the end of 2008, up from 1,791 at the end of September.
'In the year 2009, we will start to enter certain big municipalities or provincial capitals that enjoy better economic development,'Qian said. 'For example, Beijing.'
China Nepstar's initial public offering priced well above expectations Thursday, raising US$334 million.
China Nepstar plans to focus on expansion in China for the foreseeable future, Qian said.
The drugstore market here consists of 280,000 stores and is fragmented, he said, with the top 100 chains owning only 13.8 percent of the market.
'The Chinese market has ample room for us to grow in,'he said. Growing disposable income and use of pharmaceutical products also enhance expansion prospects in China, as do steps by the Chinese Government such as separating the functions of writing prescriptions and dispensing drugs, he said.
The company also plans to double its sales of traditional Chinese herbs by the end of 2008 and is considering offering private-label, or store-branded, versions of these products in the foreseeable future, he said. Traditional herbs account for 2 percent of the company's sales.
Increased sales of private-label products should be one positive sign for China Nepstar, IPOboutique.com Managing Partner Scott Sweet said in a research note.
'They are experiencing excellent growth,'Sweet said, 'and with the new needs and desires that were not staples in years past (for) the Chinese populace, that is highly likely to cause more products to be stocked and the higher-margin private-label products to be available.'
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