Yidu Technology uses the independently developed data intelligence infrastructure "YiduCore" to deeply process and analyze authorized large-scale multi-source heterogeneous medical data, establish a real-world disease domain model, help medical research, medical management, government and public decision-making, innovative drug research and development, help patients achieve intelligent disease management, improve medical efficiency, reduce costs, and accelerate the digital transformation of the industry through technology. Realize the new ecology of data intelligent green medical treatment.
Summary of the report
Leading company of medical digitalization and medical AI. Founded in 2014 and headquartered in Beijing, Yidu Technology provides health care solutions based on big data and AI technologies to hospitals, pharmaceutical, biotechnology and medical device companies, research institutions, insurance companies, doctors and patients, and policy makers. Relying on the algorithmic capabilities of YiduCore, Yidu Technology provides three major types of business, namely, big data platform and solutions, life sciences solutions, health management platforms and solutions, accounting for 36%, 29% and 34% of revenue in fiscal year 22, respectively. YiduCore has accumulated data processing and analysis capabilities for many years as the core barrier, relying on data processing and analysis capabilities to form network effects. Through providing support services for medical institutions and government departments for many years, big data platform and solution business has formed a clear commercialization path and further expanded and consolidated big data's infrastructure; the company began to explore life science solutions in the second half of 2017, enabling the clinical development and commercialization of enterprises with the help of accumulated data information and medical artificial intelligence technology platform. The company actively expand Huimin insurance and commercial insurance-related business to create a "medical insurance" ecosystem.
Favorable policies and increased demand promote the strong growth of Yidu technology business, and the valuation is expected to improve. (1) Scientific and technological innovation and the development of digital economy are still the focus of the government's work. From a policy point of view, the industry will maintain a high demand for medical big data governance, and the business related to Yidu's scientific and technological data support will continue to grow at a high level. (2) with the increasing demand for public health and urban management, the government will further increase investment in the field of public health disease prevention and control. At present, the public health services provided by Yidu Science and Technology for the government, from intelligent surveillance of epidemic and infectious diseases, epidemic and auxiliary policy formulation, gradually extended to early disease prevention and medical prevention cooperation, the market space continues to expand. (3) the country promotes the construction of high-quality clinical research center, and the demand for medical data processing and analysis and medical AI is increasing. With a large number of structured digital information accumulated by YiduCore and the core AI algorithm model, Yidu Technology can improve the quality of research results and promote clinical transformation. It is expected to gradually replace the traditional CRO company and change the competitive pattern. (4) the penetration rate of insurance types other than basic medical insurance, such as Huimin insurance and commercial insurance, has increased, and the insurance market will continue to maintain a high demeanor. (5) overlay Yidu technology is the leading company of medical digitization and medical AI, which is different from the traditional medical information company and has scarcity.
The 2024 fiscal year is expected to break even. Big data platform and solutions, life sciences solutions, health management platform and solutions all maintain rapid growth. The overall revenue growth rate for fiscal year 23-25 is expected to be 53%, 46% and 42% respectively, corresponding to 47% of revenue CAGR for fiscal year 22-25. In terms of costs, taking into account the upward trend of various expenses along with the scale of revenue, as well as the operating leverage brought about by economies of scale, we expect that the expense rate will decline year by year, the operating efficiency will improve, and it is expected to break even by 2024.
Give a "buy" rating for the first time. Using the absolute valuation method of discounted DCF cash flow, assuming that the company maintains a 10% growth rate during the FY32-FY36 period, the sustainable growth rate is 2.0%. The WACC is 13.5% and the tax rate is 15%. The company is valued at 26 billion yuan / HK $30.4 billion, corresponding to the target price of HK $30.82 (converted according to 1RMB=0.85HKD). The corresponding PS of FY2023/24/25 is 13.7 Compact 9.4 Plus 6.6.
Risk hints: policy promotion is not as expected, product commercialization is not as expected, clinical trials are not as expected, epidemic situation is repeated, macroeconomic decline and other risks.