Ping An's opinion:
Positioned as an overall medical IT solution provider, there is a certain degree of differentiation: Heren's core position is mainly a total medical IT solution provider. It prefers to provide customers with hospital-level IT solutions. The degree of customization is higher, and the products are high-end. The customer base is mainly tertiary hospitals with more complex requirements. This has formed a degree of differentiated competition with most peers in the industry whose main business model is software sales. Furthermore, the company has extended its business from in-hospital to regional platform solutions serving medical consortia. After years of intensive cultivation, it already has large-scale replication and promotion capabilities. This is also one of the company's major highlights.
The business model of small but beautiful HIT companies favors efficiency expansion: on the one hand, whether measured by the time of establishment, size of revenue, number of customers or number of employees, Herenjun is a young small listed company; on the other hand, Heren's founding team has a strong academic background, excellent product technology, and is competitive. All businesses have benchmark success stories. Their per capita income generation and per capita remuneration are significantly higher than that of peers. The corresponding business model favors efficiency expansion driven by increased per capita added value. Taken together, Heren is a small but beautiful HIT company, and its business positioning is somewhat differentiated from most friends and merchants. It is precisely because of this characteristic that it has plenty of potential for growth.
Industrial evolution momentum and policy catalysis can help unleash growth potential: Judging from industry evolution trends, since the 90s of the last century, the domestic medical IT industry has successively gone through the HIS phase and medical technology/medical auxiliary system stage. Currently, it is in the stage of comprehensive CIS construction and comprehensive promotion of GMIS. At the policy level, recent electronic medical records construction, medical consortium construction, Internet diagnosis and treatment, and DRGs related policies have been intensively introduced, which has become a catalyst for the accelerated development of the medical IT industry. The newly established local IT construction of health insurance has also provided additional market space. Heren's business positioning is in line with current industrial development trends. With policy help, expansion can be achieved through various channels, and long-term growth is promising.
Profit forecast and investment advice: The company's revenue for 2019-2021 is estimated to be 5.95, 816, and 1,080 million yuan respectively, up 51.9%, 37.2% and 32.4% year-on-year; net profit to the mother is 0.76, 1.15, and 165 million yuan respectively, up 88.0%, 51.8%, and 43.2%; the corresponding EPS is 0.91, 1.38, 1.97 yuan, corresponding to the closing price on May 24 (44.93 yuan), and P/E is 49.5x, 32.6x, 22.8x.
We believe that Helen Technology is a small but beautiful medical IT company. Its business positioning is different from most friends and merchants, and is in line with the current industrial development trend of the comprehensive construction of CIS and the comprehensive promotion of GMIS, and has long-term growth potential. With the help of the policy, the company's business grew rapidly in 2018. It is expected to continue to accelerate in 2019, and the rapid growth trend will continue in the future. Based on this, we covered the “Highly Recommended” rating for the first time.
Risk warning:
1) Hospital-side project orders fell short of expectations. Kazuhito is an overall IT solution provider on the hospital side, and there is some differentiation in positioning. If this differentiation cannot be converted into full orders, or if most hospitals do not have enough demand for complex solutions, it will drag down long-term growth.
2) The construction of the medical consortium is progressing slowly. The construction of a medical consortium dominated by urban medical groups/county medical communities is one of the current policy priorities. The corresponding regional platform business is an important focus of the company. If medical consortium construction is slow, it will affect the growth of this business.
3) The risk of high fluctuations in revenue and profit. Since Heren mainly provides hospital-wide and city-level regional platform solutions, the project order amount is higher than that of peers, but the size of the enterprise is still small at this stage, and the timing of revenue confirmation has a great impact on financial indicators.
4) Historical bad debt risk. In recent years, the company's performance has been greatly influenced by the bad debt accrual of historical project receivables. If project money cannot be recovered, the corresponding bad debt accrual will still clearly erode book profits.
5) Tradability/liquidity factors. As a small enterprise that has been listed for less than 3 years, Heren's stock price fluctuates drastically due to its small market capitalization, low share of tradable shares, and poor stock liquidity. Coupled with the impact of the lifting of the ban on restricted shares and holdings reduction by the initial shareholders.