We expect the first half of 2002 results to be affected by the April-May epidemic in the second quarter, but we expect some recovery in June.
We expect the company to list most of the hospitals of China Minmetals Group in the first half of 22; the consolidation of hospitals in state-owned enterprises is still an important point in fiscal year 22.
We have lowered the target price of the segment plus valuation method to HK $10.6; we are optimistic about the company's ability in hospital mergers and acquisitions, an attractive dividend yield (forecast for FY23 of about 9%), and maintain the purchase rating financial business affected by travel restrictions.
We expect revenue growth in the financial and consulting business sector to be lower than our previous forecast in the first half of 22 (we previously forecast revenue growth of 7% year-on-year), due to remote travel restrictions caused by the epidemic in the second quarter of 22. Travel restrictions affect the company's on-site adjustment of stock and incremental business. We believe that the above negative effects alleviated in June as the epidemic subsided. At the same time, we expect the net interest margin (NIS) to stabilize at about 3.6 per cent in FY22 (compared with 3.56 per cent in FY21), due to the growing demand for domestic health infrastructure investment and the financing cost advantage brought about by the background of central enterprises. Therefore, we lowered the financial sector's forecast revenue growth for fiscal 22 to 5% year-on-year growth (3% in the first half of the year and 7% in the second half of the year) to reflect the impact of the epidemic on the second quarter of 22.
The hospital business is also affected by the epidemic, but the consolidation work continues to move forward. We expect that the company's hospital business will also be affected by the epidemic in the first half of 22 years, due to restrictions on patient access. However, we believe that the above negative effects are expected to be partially offset by the continued promotion of state-owned enterprise hospitals. We expect the company to list the vast majority of China Minmetals's hospitals (with a total of 4000 beds), bringing the total number of beds to about 13000-14000 by the end of June. We expect the company to list all hospitals under China Minmetals Group by the end of 22 and Panzhihua Iron and Steel Hospital (about 1400 beds) in 22-23 years. In addition, the company will be in a favorable position in the for-profit specialist hospital extension mergers and acquisitions, which is expected to bring synergy to its growing general hospital business.
The ability of mergers and acquisitions in the hospital sector has been proven and the dividend yield is attractive; to maintain the buy rating, we have lowered our profit forecast for fiscal year 2022 by 6% and 7% to reflect the impact of the epidemic on the two major business sectors in the first half of 22. It is expected to be partially offset by hospitals under China Minmetals Group. As a result, we have lowered the target price of the segment plus valuation method from HK $10.8 to HK $10.6. We believe that the company is an important participant in hospital mergers and acquisitions, based on 1) excellent financing capabilities and 2) compared with smaller peers, companies can achieve self-synergy through a growing hospital network. We think the company's projected dividend yield of 9% for fiscal 23 is also attractive. Main risks: epidemic disturbance, medical insurance risk, medical accident risk, policy risk and so on.
