A new starting point, a new journey. Great Oriental made a strategic transformation in the field of health care at the end of 2020, and Junyao Medical was established on December 28, 2020. Great Oriental owns 80% of Junyao Medical. In 2021, the company acquired about 51%, 40.7% and 60% of "Shuyang Zhongxing Hospital", "Jiangao Pediatrics" and "Ya'en Health" respectively through Junyao Medical treatment. In 2022, the company acquired about 68.19% of the equity of Zhibei Medical; in the same year, the company continued to transfer the equity of Jangao Pediatrics, with a total shareholding of 53.6%.

2022 is the first complete fiscal year after the transformation of Greater Oriental medical services, and the medical business opens up a new space for performance growth. Medical services accounted for about 15.6% of the company's revenue in 2021, mainly because a large number of car sales were included in the company's performance from January to August in 2021. In 2021, the company spun off the traditional car sales business, although the company's short-term revenue and profits declined, but the company's incremental source has been transformed into a promising medical services business. We estimate that medical services will account for about 70% of the company's revenue in 2022.

Retain the main retail business of department stores to support the development of the company. Although a large number of brick-and-mortar stores have been hit by the booming development of e-commerce, online consumption cannot completely replace offline consumption. Great Oriental Department Store is located in the core area, and its offline consumption scene and display scene are scarce. Department store joint venture business can provide the company with stable cash flow and support the steady development of the company.

Investment advice. It is estimated that the company's operating income from 2022 to 2024 will be 2.931 billion yuan, 3.246 billion yuan and 3.604 billion yuan respectively, with year-on-year growth rates of-57.6%, 10.7% and 11.1%, respectively. The company has issued a performance notice, we take the median of the performance forecast, conservatively estimate that the company will achieve a net profit of about 180 million yuan in 2022, deducting 10 million yuan in non-return net profit. We expect the company's traditional main business to be stable and the medical business to maintain a high growth rate. The company's net profit deducted from 2023 to 2024 will be 80 million yuan and 90 million yuan respectively.

From a comparable perspective, the average PS of medical service companies in the industry is about 10.1 times, and the PS of Great Oriental excluding food business is 2.17 times. Cover for the first time, giving a "buy" rating.

Risk hints: macroeconomic and policy risks; industry competition risks; medical service business is still in the cultivation period, management and business risks.