We expect that the scale of hospital business income in fiscal year 22 will exceed that of financial business, mainly contributed by seven state-owned enterprises and hospitals.

We expect that mergers and acquisitions of state-owned hospitals and extension mergers and acquisitions will be the key growth points in fiscal year 23 and in the future, and it is expected that the continuous improvement of the scale effect of the company's hospital business will also promote endogenous growth.

We keep the target price of the segment plus total valuation method unchanged at HK $10.3; we are optimistic about the company's ability in hospital mergers and acquisitions, an attractive dividend yield (forecast for FY23 of about 8%), and maintain an overweight rating.

For 22 years, the hospital business has been achieved as scheduled, and the financial business is expected to maintain steady growth. we still expect the financial and consulting business revenue to achieve steady growth in the second half of 22, mainly due to an improvement in business investment compared with the first half of 222. however, the business is still disturbed by the epidemic. We expect the rate of non-performing assets in the second half of 22 / 22 to be less than 1%, 1% (0.98% in the first half of 22), mainly due to the company's consistent implementation of sound risk control policies. We expect hospital business revenue to grow by 29% year-on-year in the second half of 22 (28% year-on-year in the first half of 22), mainly due to the consolidation of 6 Minmetals Hospital and Shanghai China Metallurgical Hospital at the end of March and the end of 22, respectively (a total of about 4000 beds), but partially offset by the disturbance of the epidemic in the fourth quarter of 22. We believe that from fiscal year 22, the hospital business revenue (we forecast 5.928 billion yuan in fiscal year 22) will exceed the financial business (5.728 billion yuan).

The consolidation of hospital business is still the key growth point in the future, and the new medical policy of state-owned enterprises is good for the company. We think that the consolidation of hospitals of state-owned enterprises will still be the key growth point of hospital business in fiscal year 23. We expect that the consolidation table of Panzhihua Iron and Steel Hospital will be completed in the first half of 23, and the number of beds in the company's hospital is expected to reach about 15000 by the end of the first half of 23. The company expects the number of beds to reach about 30, 000 in fiscal year 25 (of which about 4000 are from the expansion of existing hospitals). This means that the growth of about 10,000 beds will be achieved through mergers and acquisitions of state-owned hospitals or for-profit specialist hospitals during the 23-25 fiscal year. In addition, we expect 1) the improvement of the scale and operational efficiency of the company's hospital business and 2) the recent favorable policy of "supporting the high-quality development of medical institutions run by state-owned enterprises" drafted by 13 ministries and commissions, will promote the company's long-term endogenous growth.

The ability of mergers and acquisitions in the hospital sector has been proven and the dividend yield is attractive; maintain the overweight rating we maintain our profit forecast for fiscal year 2022 and keep the segment plus valuation target price unchanged at HK $10.3. We continue to be optimistic about the company's prospects in the field of hospital mergers and acquisitions, based on 1) its excellent financing ability and 2) compared with smaller peers, the company's growing hospital network is more conducive to achieving synergies. We think the company's projected dividend yield of 8% for fiscal 23 is also attractive. Main risks: regulatory risk, epidemic situation, payment risk and so on.