Events: recently, the National Development and Reform Commission, together with the National Health and Family Planning Commission, the Ministry of Human Resources and Social Security, and the Ministry of Finance, issued a circular on issuing opinions on promoting the price reform of medical services.
The price reform of medical services is good for private medical institutions, and the company will usher in a broader space for development. 1) the main impact of this price reform is the basic medical services provided by non-profit organizations (other types of services have been marketed). At present, the company's medical service business is mainly basic medical services, the price system adopted is consistent with that of public hospitals, and will also enjoy price liberalization dividends. 2) the purpose of the price reform of medical services is to optimize the allocation of medical resources, the competition environment of the industry will be more market-oriented in the future, the service quality and operation ability of private hospitals will be the focus of competition, and the company has rich experience in hospital management. core competitiveness is expected to be further prominent 3) this reform implements hierarchical management of medical service prices, and we believe that one of the purposes is to adjust the supply pattern of medical services. In the future, public hospitals will focus on grass-roots medical needs. High value-added services represented by special medical services will be undertaken by private medical institutions, and the company, as a social medical participant, will enjoy a broader space for development.
The replication effect of "Suqian model" is beginning to show, and the rapid growth in the field of medical services is expected. At present, the company has copied the "Suqian model" in Yizheng Hospital and Anqing Hospital. According to the development path of Suqian Hospital, we think that the growth momentum of the three hospitals is sufficient: 1) Suqian Hospital has entered a period of stable growth, the income growth rate is stable at about 10%, and the current bed utilization rate remains above 100%. The future growth point will be the expansion of beds and the improvement of turnover. 2) Yizheng Hospital has been basically integrated, and the net interest rate is still relatively low at 5%. Compared with Suqian Hospital, there is still much room for improvement. 3) Anqing Hospital merged in 2014 and is still in the period of integration. It is expected that the performance will be gradually released in the future; 4) Medical service is the strategic focus of the company, and it may continue to deepen the reform of public hospitals in the future, or there may be extension expectations.
The pharmaceutical business has been under pressure for a long time and may stabilise. Under the double pressure of bidding and safety of traditional Chinese medicine injection, the sales of the core variety Mailuoning injection have been declining for six consecutive years, and the sales volume and selling price are basically at the bottom, and it is expected that it will stabilize in 2017. Since entering the new round of bidding, the company has launched the price maintenance strategy for the core products. We believe that under the bidding mode of price linkage, it is an effective means to maintain the price, maintain the profit margin or maintain the lasting vitality of the company's pharmaceutical sector.
Profit forecast and investment advice. It is estimated that the EPS from 2016 to 2018 is 0.43,0.53,0.68 yuan respectively, and the corresponding dynamic PE is 34 times, 28 times and 22 times respectively. Although the profit forecast is slightly lower than the previous report (major products are under pressure), the relevant policies are favorable to increase the company's future performance imagination (with great potential for medical services), and the company's three hospitals have sufficient growth momentum. It is expected that in the later stage, the layout of the medical service sector will still be enlarged through extension expansion. The continuous improvement of the performance share of the medical services sector is expected to pull up the overall valuation level, and the reform of state-owned enterprises is expected. Upgrade to "buy" rating.
Risk tips: the risk of bidding for price reduction service or exceeding expectations; the risk of extension or lower than expected.