Investment highlight
For the first time, Desijia (01846) rated the outperforming industry with a target price of HK $8.80,14.4x and 11.5x in 2022-23. The reasons are as follows:
Desijia: positioning high-end ophthalmology clinics, the performance has been growing rapidly in recent years. The company is rooted in the German high-end private eye clinic model, with a streamlined surgery center as the carrier to achieve rapid expansion, the new surgery clinic can break even within about a year, driving the company's rapid expansion and growth. In 2021, the company is expected to achieve a net profit of HK $1.32-138 million, with an average annual compound growth rate of 46.7-48.0% from 2016 to 2021, with a total of 28 clinics and consultation centers.
Industry: domestic visually impaired population base is large, surgical penetration rate is low, the market space is broad. Technological renewal superimposed the trend of upgrading of household consumption, driving China's ophthalmology medical industry into a period of vigorous development.
Compared with European and American countries, the penetration rate of high-end ophthalmic surgery in China is low, and there is broad room for improvement in the future. According to Frost & Sullivan,2023, the market scale of advanced lens replacement surgery and refractive surgery in Chinese private hospitals is expected to reach 23.4 billion yuan, with an average compound growth rate of 29.6% from 2018 to 2023.
High-quality doctors + technology + services for the moat, streamlined business model with continued expansion to achieve rapid growth. 1) High-quality doctors establish technical barriers and streamline business models to bring high profit margins: the company has first-class doctor resources and cutting-edge surgical technology, and a high-quality business model that specializes in business, quality service and high patient referrals. through the small "surgery center + clinic" model to achieve rapid layout, capacity utilization increases to drive the marginal effect to improve continuously. 2) focus on the continuous expansion of first-and second-tier cities, differentiated services + high-quality word-of-mouth to open the market: in recent years, the company has rapidly promoted the expansion of domestic layout, ploughing the north, Shanghai, Guangzhou and Shenzhen, and actively expanding into new first-tier cities. High-quality business model helps to achieve rapid profitability. 3) strong word-of-mouth accumulation drives steady endogenous growth, and epitaxial mergers and acquisitions enjoy synergy: the company has been ploughing the German and Danish ophthalmology markets for many years, leading in word-of-mouth accumulation and market share; in January 2022, it acquired London Vision Clinic to open up the UK market.
What is the biggest difference between us and the market? We believe that the company's streamlined business model has high anti-risk ability and considerable growth potential, and the rapid breakeven of the clinic and high word-of-mouth referral rate verify the company's superb technology and high-end service level; with a differentiated competitive strategy, performance growth is expected to exceed market expectations.
Potential catalyst: the landing of overseas M & A projects; the accelerating layout of domestic clinics.
Profit forecast and valuation
We estimate that the company's EPS for 2021-23 will be HK $0.41, HK $0.61, HK $0.76, respectively, and the CAGR will be 36.1%. The current price corresponds to 10.2 times and 8.1 times of Pamp E in 2022-23. Considering that the company has a high-level and stable team of doctors, a streamlined business model and an advantage in technological competition and operational stability, DeShijia is given a "outperform industry" rating for the first time, with a target price of HK $8.8. Corresponding to 2022-23, there is 14.4 times and 11.5 times for Phammer E, which is 41.7% higher than the current stock price.
Risk
Repeated epidemic situation at home and abroad; insufficient supply of doctors; change of private medical policy; risk of medical emergency.
