Continue to promote strategic upgrading and create differentiated market positioning
Ping An Healthcare And Technology will continue to deepen the strategy 2.0 upgrade in 2022. The adjustment of business model may put short-term pressure on the company's revenue growth. As a result, we have lowered our 2022 Universe revenue forecast by 5.2% to RMB 7.7 billion / 8.9 billion. In 2022, the company will focus on developing medical service business and improving operational efficiency. We forecast a non-IFRS net loss of 1.181 billion / 692 million yuan in 2023 (previous value: net loss of 1.006 billion / 577 million yuan), which is smaller than the net loss of 1.4 billion yuan in 2021. We have lowered our target price based on the DCF valuation method by 2.6% to HK $30.50, corresponding to 3.5pm 3.0 times the 2022amp 2023 forecast PS. We expect the effect of strategic upgrades to appear in 2H22, supporting the company's long-term earnings growth. Maintain a "buy" rating.
The first phase strategy: expanding the base of paying users
We expect medical services revenue to reach 23% in 2022-2024. CAGR,2024 annual revenue accounts for 42.4% of total revenue, mainly driven by e-prescription sales and the growth of paying users. The company will continue to rely on Ping an Group's customer resources to expand customer access channels. We expect the number of paying users in 2022 and 2023 to grow by 19.0% and 14.6% year on year in 2024 to 45.2 million / 51.8 million / 56 million by 8.1%, mainly driven by the growth of enterprise-side customers. We predict that the gross profit margin of the medical services business will rise steadily from 36.1% in 2021 to 38% in 2023 and 42% in 2024, mainly due to the increase in the income contribution of higher-margin member services.
Improve the level of enterprise customer service
We expect revenue from health services to fall by 1.0% year-on-year in 2022, mainly due to a decline in revenue from the purchase of medical and health drugs by enterprises. Looking to the future, the company will focus on improving the quality of consumer medical services for corporate customers. Driven by the growth in consumer medical service income from corporate customers, we expect health service revenue to accelerate again in 2023, up 8.0% and 7.3% year-on-year, accounting for 60.4% of total revenue, accounting for 57.6%.
The change of income structure helps to improve profitability
We expect the overall gross margin to increase from 23.3% in 2021 to 25.1% in 2024, 28.5% in 2024, as the income structure shifts to higher-margin health services. The company will carefully control marketing expenditure. We expect the company's sales expense rate to fall from 24.0% in 2021 to 20.0% in 2022, 2023, and 16.2% in 2024. As a result, we expect the adjusted net loss rate to narrow from-19.3% in 2021 to-15.3% in 2024 to-15.3% in 2024.
Risk tips: 1) the policy benefits are not as good as expected; 2) the growth of online medical services is slower than expected; 3) competition intensifies.