Report guide

Hong Kong's largest non-hospital medical and beauty service provider, one-stop platform to build a large health ecological closed loop, business development + regional expansion-driven development.

Main points of investment

Deep ploughing big health market, medical plus medical beauty two-wheel drive.

Med Health was founded in 2005, started as a medical beauty business, expanded its business scope through endogenous growth and mergers and acquisitions, and gradually grew into the largest non-hospital medical service provider and the largest medical beauty service provider in Hong Kong. As of FY22H1, it has 91 clinics / service centers, covering 23 subdivided medical specialties. The company's FY16-21 revenue CAGR is up to 24%. FY22H1 showed a trend of full recovery, with revenue / net profit of HK $1.44 billion / 160 million respectively, an increase of 81% and 265% compared with the same period last year, with a gross margin / net profit of 89.1% and 13.6% respectively. From a business point of view, the proportion of medical services / aesthetic medical / beauty health care / product sales revenue is 52.5%, 27.7%, 15.1%, 2.7% respectively; from a regional point of view, the proportion of income from Hong Kong / Macao / mainland is 90.8%, 3.7% and 5.5%, respectively.

Hong Kong's medical and medical services: the standard of the leading system is sound, and the private sector is booming.

Hong Kong leads the world in medical care, with a per capita life expectancy of 84.7 years, a sound health care system and high efficiency, and medical expenditure accounts for only 6.2 per cent of GDP. High-quality medical care has formed a word-of-mouth effect, which also contributes to the cross-regional expansion of Hong Kong medical brands. By the end of 20 years, Hong Kong's expenditure on medical services reached 189.6 billion Hong Kong dollars, of which private health care accounted for 88.1 billion Hong Kong dollars, and is expected to maintain a rapid annual compound growth rate of 7.6 percent in 20-24 years. In addition, it is estimated that the Hong Kong medical and beauty market is more mature, the penetration rate is more than five years ahead of the mainland, and the per capita consumption of medical and beauty customers is about 5.7 times that of the mainland. According to Sullivan, Hong Kong's medical and dental beauty market reached HK $7.75 billion in 19 years and CAGR of 15% in 5 years. Medical thinking Health through endogenous growth + epitaxial mergers and acquisitions, continuous integration and expansion to form a strong brand effect. In 14-17, the company's market share in Hong Kong increased from 6.8% to 18.9%.

Core advantages: empower medical assets as enterprises and create an one-stop service platform.

Enterprise empowerment: solve the pain points of traditional clinic development and share the company development dividend. The company relies on brands and resources to achieve collectivized professional operation, directly hits the pain point of scattered and inefficient private medical care in Hong Kong, and implements a shareholding manager plan, binds core talents, combines industry, university and research deeply, and constructs a system of professional development of doctors. As of September 21, the company has 176full-time registered doctors, 167nurses and 611 therapists, and more than 1400 network doctors.

Multi-pronged approach to efficient access to customers: public domain traffic up to reach, private domain operation cross-drainage. Launch the TTIPP strategy, cooperation quality enterprises to broaden the source of customers; deep cultivation of private domain traffic to achieve cross-diversion, the proportion of new customers referred from existing customers is about 45%; the development of medical tourism to meet the mainland demand; the passenger fee rate is only 5.1%, far lower than the industry average.

Intensive cultivation helps to retain: to create an one-stop diagnosis and treatment experience, digital technology to enhance the service experience. The company has built a number of one-stop service centers in Causeway Bay, Mong Kok and Central, digital operation and efficient management of customers, multi-customer demand mining, multi-business cross-drainage. Through big data system for panoramic portrait analysis of new users, its APP provides customers with personalized services such as remote consultation. The user retention rate is more than 80%, and the negative feedback refund rate is only 0.01%.

Development highlights: business development + regional expansion dual-driven, future growth can be expected.

1) New business development: card position pet medical high prosperity track, M & An integration experience can be developed. Since 10 years, the company has completed more than 30 high-quality brand mergers, gradually expanded the territory, and made use of the company's existing resources to optimize operation, which can form a good coordination with the existing business. At present, 23 medical specialties have been covered, and a number of M & An activities have been controlled in the current cycle of about 5 years. The company has cut into the pet medical track in the past 21 years and continues to increase its size. We believe that the company's rich experience in M & An integration will effectively enable new business development and open up a new growth curve.

2) Regional expansion: to undertake the outflow of medical and beauty needs in the mainland, and to lay out the Greater Bay area with great foresight. The company released the strategic plan of 2025 Great Bay area in 21, taking Guangdong-Hong Kong-Macau Greater Bay Area as a strategic development center, hoping to achieve the sales revenue target of HK $1 billion (total revenue of HK $6 billion) in the region in 25 years. And will focus on the development of medical beauty, chiropractors, dentistry and other consumer medical programs. The company adheres to the light asset mode of operation, and the single store can break even in 3-6 months. The mainland replication capability has been gradually verified. The average revenue of the FY21 single store has reached 899.1 million Hong Kong dollars, and the 4-year CAGR is as high as 54%. The Greater Bay area strategy is expected to push the company's performance into the fast lane.

Profit forecast and valuation:

The company is the largest non-hospital medical service provider and the largest medical and beauty service provider in Hong Kong, with endogenous growth + epitaxial mergers and acquisitions, high-prosperity and high-quality racetrack, with excellent gathering of doctors, customers and operational capabilities to create a high retention one-stop medical service platform. Newly cut into the pet medical track, cross-empower with the existing business; the newly released Greater Bay area strategy, remote expansion brings new increments, with considerable growth potential, worthy of attention. It is estimated that FY22/23/24 's revenue will be HK $290,373 million, an increase of 39.5%, 28.4%, 27.3%, and net profit of 3.4%, 480, 000, 000 At present, valuations have some room for improvement compared with their peers, covering the "buy" rating for the first time.

Risk Tips:

The risk of less-than-expected recovery of the epidemic, the risk of lower-than-expected expansion of new stores, the risk of regulatory policy changes, and the risk of medical and medical accidents.