2018 performance increased 6.30%, 2019Q1 performance is expected to increase 50-80%
The company's main business is 3 hydropower plants in Hunan Province, with a total installed capacity of 230 MW; in addition, the hospital business holds and shares in 5 rehabilitation hospitals with a total of more than 1,200 beds; the pension business mainly carries out community pension and health industrial park projects. In 2018, the company's revenue was 267 million yuan, an increase of 9.09% over the previous year; 2019Q1, the company predicted a 50-80% increase in profit, reaching 2911.889-34.942 million yuan, mainly due to a huge increase in incoming water.
The hydropower business is stable as a whole, contributing to the financial flow
The company owns 2 hydropower plants and participates in 1 hydropower plant with a total installed capacity of 230 MW. The discount margin over the years has been small, providing a solid and stable cash flow. In 2018, the company controlled 848 million kilowatt-hours of feed-in electricity, and the average number of hours used by the holding was 4990 hours, far higher than the average of 2,795 hours in Hunan Province. The company's net operating cash flow for the year was 110 million yuan, reaching 148% of net profit. Performance and cash flow were mainly contributed by the hydropower business.
The hospital business has been steadily laid out, and the finances of newly established hospitals have been steadily improving
The company's hospital business mainly holds and shares in 5 rehabilitation hospitals to provide post-operative rehabilitation treatment for critically ill patients. The four new hospitals listed in the list gradually reduced losses in 2018, and the total revenue increased 31.23% year on year; the net profit of Xiangya Pok Oi Hospital, which has a 49% stake, has stabilized at around 20 million yuan in recent years, and ROE has reached 13%. As new hospitals enter a performance harvest period one after another, the company's performance is expected to show additional elasticity.
The pension business space is broad, and the community pension is quickly distributed
The aging of the population is a long-term trend in China. The space for old-age care business is broad. Among them, it is limited by the ability of the majority of the population to pay. Community pension is a relatively operable form of old-age care. The company has signed contracts to set up 61 communities in Hunan Province, carried out the construction and operation of embedded Xiaowei pension institutions in the Jinke community, actively undertook government procurement service projects such as home care services in Tianxin District and the construction and operation of an information platform for old-age services in Wangcheng District, and explored the launch of value-added services such as healthy living, housing, food and medicine and rehabilitation.
The first coverage gave an “increase in holdings” rating
It is estimated that the company's revenue in 2019-2021 was 281/291/302 million yuan, and the net profit returned to the mother was 1,111/1.19/127 million yuan. The corresponding dynamic PE was 39x/36x/34x. Optimistic about the high-quality assets of its main hydropower business and investment prospects in the hospital and pension business, it covered a “increase in holdings” rating for the first time. A reasonable valuation of 10.06-10.28 yuan.
Risk warning:
Risk of fluctuations in incoming water and electricity, risk of falling electricity prices, and distribution and profits of hospital and pension businesses are lower than expected