Revenue was better than expected under the pandemic, and business development continued to advance: the company's revenue for the first half of 2020 fell only slightly by 1.1% compared to the same period last year to HK$262 million, mainly due to the impact of the COVID-19 pandemic. In Hong Kong, revenue increased 0.5% year on year to HK$136 million; in the Mainland, revenue decreased 2.7% year on year to HK$126 million, or 2.4% in RMB terms. Overall, overall revenue for the first half of 2020 was better than expected.
The number of surgeries in both places continues to rise. The average cost has declined, but the reasons are different: in the first half of 2020, the number of surgeries in Hong Kong and the Mainland increased by 7.6% and 21.1% year-on-year, respectively, to 2,635 and 5597. However, the average cost of surgery has decreased compared to the same period last year, but the reason is different. Hong Kong is mainly due to an increase of 4 new doctors compared to the same period last year, diluting the average cost of surgery. The mainland is mainly due to the high number of medical insurance patients at the two new ophthalmology hospitals (Kunming and Shanghai) and lower fees for medical insurance patients. However, as the market grows and matures and brands are established, it is expected that the number of self-funded patients will increase in the future, and the average cost is expected to rise.
Shenzhen is the axis of radiating the Guangdong-Hong Kong-Macao Greater Bay Area, and the pilot Kunming promotes penetration into second- and third-tier cities: Currently, the company is focusing on developing Greater Bay Area business. This year, the company will establish and operate 3 new eye hospitals in the Greater Bay Area through various strategies such as acquisitions, self-construction, or clinic upgrades, covering Zhuhai, Bao'an, Shenzhen, and Huizhou. The company also acquired an ophthalmology hospital in Kunming and is actively seeking business development opportunities in second- and third-tier cities.
Second- and third-tier cities have many advantages, such as a large patient base, lower cost of surgery, and few competitors.
Ophthalmology and management talents are fundamental. Internal incubation and external joint cultivation go hand in hand: the talent problem is one of the main obstacles limiting the operation and expansion of private specialist hospitals in the mainland, and ophthalmology is no exception. The company currently has 73 ophthalmologists, including 57 doctors from the mainland, including nearly 1/3 of the chief physicians and 7 foreign doctors. At the same time, the company also hired an international ophthalmology consultant team of 20 experts and specially invited ophthalmologists from the top three ophthalmology hospitals to attend the consultation. In the future, the company will meet the needs of business expansion through internal incubation, training, and promotion of talents and joint universities to cultivate talents.
Our view: From 2018 (IPO) to 2020, the company mainly focused on consolidating the foundation and steadily advancing the business layout of the Greater Bay Area and first-tier cities with Shenzhen as its base. In the medium to long term, the company actively explores business development opportunities in second- and third-tier cities using Kunming as a pilot, thus achieving a high-end ophthalmology diagnosis and treatment network that relies on Hong Kong, is based in Shenzhen, and covers the whole country. With the continuous deepening of business expansion, the continuous increase in the number of surgeries, and the establishment of brand and reputation, the company's future market share is expected to increase further.
Risk warning: The impact of the epidemic has exceeded expectations, market competition has intensified, and there is a risk of exchange rate fluctuations.
