The domestic market of ophthalmology medical service is vast, and private institutions have development advantages. According to Frost Sullivan data, the number of cases of eye diseases in China is increasing year by year, and is expected to increase from 1.025 billion in 2015 to 1.343 billion in 2024, with a CAGR of 3.05%. Myopia, cataract and presbyopia are the most common eye diseases in China. In 2024, the number of myopia will increase to 670 million, cataracts over 45 years old 197 million, and presbyopia over 45 years old 476 million. It is estimated that the size of China's private ophthalmology market will reach 70.7 billion yuan in 2024.
Deep ploughing Inner Mongolia, actively expand outside the province. The company contributes the main income in Inner Mongolia, three hospitals in the region have matured and have a strong influence, and the proportion of income in Zhejiang is increasing year by year. The company's comprehensive gross profit margin and net profit margin have increased year by year. The proportion of income from consumer ophthalmology medical services has increased year by year. In 2022, under the influence of the epidemic situation in many places, the acquisition of hospital clusters in Tangshan area was still completed. The company's business consists of 20 eye hospitals and 25 optometry centers, operating in five major provinces and autonomous regions of Inner Mongolia, Zhejiang, Jiangsu, Shanxi and Hebei.
Advanced technology and equipment, expert doctors practice more. The company takes the lead in providing advanced medical technology such as micropulse laser, minimally invasive vitreoretina and artificial vitreous implantation in Inner Mongolia, and introduces advanced equipment such as cataract phacoemulsification instrument and VisuMax full femtosecond laser. In addition, more than 20 drugs made by the company have been widely praised for more than 20 years. As of 2022H1, the company has 207physicians and 77 part-time multi-point practitioners, most of whom are well-known experts in the country. The company has a sound doctor training system, and continues to hire external experts and consultants for training. The company also cooperates with colleges and universities to train ophthalmic medical talents.
Investment suggestion: we expect the company's net profit for 2022-2024 to be 220Universe 279Universe 349 million, a year-on-year increase of 23.0%, 26.7% and 25.4%, corresponding to a 2022-2024 EPS of 0.31 PE (equivalent to HK $0.34, 0.43, 0.54). With reference to relative valuation and Hong Kong stock liquidity environment, we give Chaoju Ophthalmology 9 times PE in 2023. Corresponding to the company's target price of HK $3.87, it was covered for the first time and was rated as "overweight".
Risk tips: government and health insurance limit risk; regional expansion risk; potential competition risk; medical malpractice risk; brain drain risk; unable to successfully implement growth strategy or manage development risk.