The company has been engaged in the field of health insurance control for nearly 10 years, providing intelligent health insurance audit services for 149 medical insurance fund units in 23 provinces across the country, with a market share of more than 37%. The arrival of 4 billion central enterprises will strongly promote the landing of PBM, and the follow-up is expected to carry out a trillion-level market of commercial insurance and C-end third-party services. For the first time, the coverage gives a "highly recommended-A" rating.
Central enterprises reverse mixed reform to create a "national team", health insurance big data opened a new era. On November 9, 2017, State Venture Capital announced that it would increase its capital by 500 million yuan to Zhonghai Heng (25.74% equity stake in the company after the reduction is completed), and add 3.696 billion yuan by stages according to the situation, becoming the real controller of Haihong and opening the door of reverse reform of the company. The market has two main doubts about Haihong: 1, the company has been promoting PBM and charging model, but has been unable to land; 2, health care reform is full of difficulties, how can the company break the situation? We believe that the market underestimates the marginal change of corporate identity transformation, and the identity of central enterprises is of decisive significance to the integration of health insurance system and the landing of business model. The national big data strategy has been opened, and the company is expected to become the "national team" of medical and health big data services. we believe in the determination and ability of the party and government to promote the establishment of national health big data and deepen health insurance reform.
Great breakthroughs are expected to create great opportunities for the company. People are the biggest beneficiaries of deepening medical reform, but with the aging of China's population structure, health insurance payment is facing unprecedented challenges. We believe that the breakthrough is to establish health care big data and medical insurance control system and mechanism. Haihong's PBM business has carried out 201 health insurance service programs in 23 provinces, covering 277 million people, accounting for 37.21% of the total number of urban basic medical insurance (744 million in 2016). With the promotion of "healthy China" to the national strategy, the scale of the health service industry will exceed 8 trillion yuan by 2020, we believe that the presence of central enterprise resources is expected to help the company solve the greatest difficulties in the promotion and service of medical big data. The great opportunity for health services in the new era has come.
Take the medical insurance big data service as the cornerstone, solve the commercial health insurance pain point. The proportion of commercial health insurance payments in China accounts for only 4.5% of medical expenses, and the premium income of commercial health insurance as of October 2017 is 384.2 billion, an increase of 5.3% over the same period last year. However, due to the failure to effectively cover the most common demand, the proportion of total medical expenditure is on the low side. Haihong is expected to review the huge amount of medical data accumulated by the business through the Medical Insurance Fund, solve the pain points in the commercial health insurance industry and open up more room for the company's growth.
Investment advice. We believe that the central enterprise Guoxin, as the actual controller of Haihong, is expected to change the current situation that the company's health insurance fee control business model has been unable to land for a long time, and on this basis to develop a trillion-level commercial insurance market. It is estimated that the net profit for 2017-19 will be 0.21 million RMB 167pm, giving a "highly recommended-A" rating for the first time.
Risk tips: 1, the capital increase and sale of assets failed; 2, the PBM business charging model fell short of expectations; 3, the promotion speed of commercial insurance business is slow, and the market competition intensifies.
