It has been more than 23 years since the establishment of the first brand of private high-end oral services in China. Since 1999, the company has been adhering to the customer-oriented business philosophy. As of March 31, 2022, the company operates 112 clinics and hospitals (51 Ruier Oral Clinic, 54 Ruitai Oral Clinic & 7 Ruitai Oral Hospital) in 15 cities across the country, with 883 senior dentists. The company locates middle and high-end private oral medical services and ploughs first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. In fiscal year 2022, the company achieved a total operating income of 1.642 billion yuan (+ 8.32% compared with the same period last year) and an adjusted net profit of 66 million yuan (+ 17.68% over the same period last year). The company still achieved growth under the disturbance of the epidemic, and its operation and management ability was verified; FY2022 achieved a gross profit margin of 20.74%, and there is still room for improvement.
Dual-brand strategy shapes users' mind, repurchase rate & customer satisfaction Shuanggao operates two brands, Ruier and Ruitai, among which Ruier is the leading brand of high-end oral medical services in China. mainly aimed at wealthy patients with high purchasing power and high lifetime value in first-tier cities. Ruitai is a more cost-effective oral medical service, which provides services at a more affordable price and occupies a larger market for mid-range oral medical services. In fiscal year 2022, Ruier Dentistry and Ruitai Dentistry contributed RMB 832 million and RMB792 million respectively, an increase of 8.38% and 5.90% respectively over the same period last year, and the growth was still achieved under the disturbance of the epidemic. In fiscal year 2022, Ruier and Ruitai received 561 million RMB99.80 million visits respectively, an increase of 10.88% and 15.35% over the same period last year. The revisit rate of first-time patients within six months was 48.6%, and the ability to obtain customers continued to strengthen.
The market for oral medical services has not yet reached the ceiling, and the demand for middle and high-end medical services needs to be met urgently. With the sustained economic and social development, the accelerated process of population aging and the continuous improvement of residents' health awareness, China's per capita medical consumption expenditure continues to grow, and the demand for medical services continues to expand.
In the context of demand-driven, the scale of China's oral medical service market continues to expand, and is expected to reach nearly 300 billion yuan in 2025. In addition, the expansion of upper-middle-class consumer groups makes the demand for middle-and high-end oral medical services continue to grow, and the market for middle-and high-end oral medical services is expected to expand. However, the penetration rate of private oral medical services in China is still low, and the total income of the five private oral medical institutions before 2020 accounts for only 8.5% of the total market income, which has a lot of room for improvement.
The company has a perfect dentist training system and diversified physician incentive mechanism, and the retention rate of physicians is high. Dentists employed in more than 5-10-15 accounted for 31.4% of the total number of physicians, 11.1% and 5.1%; senior doctors are rich in resources, have an average of 10.6 years of experience and have a high reputation among patients. Excellent physician resources superimposed customized and personalized full-process service and standardized operation model further improve the company's service efficiency, and customer satisfaction is 97% in fiscal year 2021.
Investment advice: cover for the first time and give a "buy" rating
The company is a domestic high-end private oral medical service provider with a long history of 23 years. We believe that the company will continue to meet the market demand for high-end oral medical services on the basis of dual-brand strategy. Word-of-mouth operation with standardized and personalized services, so that the company continues to improve efficiency, business territory continues to expand, to achieve sustainable growth. We expect the company to achieve an operating income of 1.9272269 billion yuan in the fiscal year 2023-2025, an increase of 17% over the same period last year, an increase of 17% to 16%, and a net profit of 0.43% to 0.93 million yuan, an increase of 106%, 107% and 62%, respectively. To achieve an adjusted net profit of 1.22 per cent, 1.64 per cent, RMB 214 million, an increase of 85 per cent, 35 per cent, and 30 per cent over the same period last year, corresponding to the adjusted PE 50Universe 37exp 28x (exchange rate factor 0.81). Cover for the first time, giving a "buy" rating.
Risk hint
The risk of emergencies such as repeated outbreaks, the lower-than-expected risk of opening new clinics, policy risks, recruitment and retention of high-quality dentists.