Key points of investment

Summary of the paragraph: 2023Q1 achieved operating income of 220 million yuan (-22.03%, compared with the same below), net profit of 3,373 yuan (-52.28%); after deducting non-return net profit of 32.68 million yuan (-46.87%), the performance was in line with expectations.

The performance of the medical service sector increased dramatically. Boao International Hospital continued to introduce advanced pharmaceutical equipment and completed the construction of the Ezhou Second Hospital. The year 23 ushered in an inflection point: with the implementation of “Class B B tube”, domestic travel and hospital treatment business were drastically restored, we expect the company's Ezhou Second Hospital's revenue and profit to increase sharply; Boao International Hospital is located in Lecheng and has the privilege to test first. With the resumption of residents' travel, we expect 23Q1 Boao International Hospital's revenue to be close to 50 million yuan, a profit of close to 20 million yuan, an increase of close to 150%. Looking ahead to '23, with the official opening of the new Ezhou Second Hospital and the number of visitors to the Boao International Hospital gradually rising, the company's medical services will reach a major inflection point in performance in '23. We expect the company's Ezhou Second Hospital's revenue to reach 200 million yuan and profit is expected to reach 25 million yuan; the number of visitors to Boao International Hospital is expected to exceed 4,000, and revenue is expected to reach 250 million yuan.

The decline in overseas investment orders dragged down the performance of the Q1 table. I am optimistic about domestic sales in the industrial sector in '23:

2022Q1 still has overseas epidemic-related injection orders, and the number of safety syringe exports declined in 23Q1, dragging down apparent performance. We believe that Q1 has already absorbed the high base of early injection orders, and overseas bets are expected to stabilize in the future. In 2023, with the company's “250 million prefilled catheter irrigator project with an annual output of 250 million prefilled catheter irrigators” fully completed and put into operation, the completion of the construction of safety injection channels, and the increase in domestic popularity of safety syringes, prefilled irrigators are expected to drive the company's medical device revenue to a new level, and sales of safety syringe products are expected to reach a new level. growth. We expect overseas investments to maintain growth of more than 10% in 23-25, domestic growth of more than 40%, and that prefilled washers will achieve revenue of 13/175/230 million yuan in 23-25.

The divestment of non-performing assets is complete, and the first equity incentive after the IPO will motivate future companies to see their performance take off:

In 2018-2022, the company has successively disposed of bad assets such as New Friendship Hospital and Jimin Hospital, and successfully implemented a lightweight package; on March 31, 2023, the company issued an equity incentive plan, the first equity incentive after listing. A total of 42 people were incentivized. The corresponding assessment year for the three fiscal years 2023-2025 was 2023-2025. Company-level performance assessment targets: net profit of 2023-2025 was not less than 1.8/23/30 billion yuan respectively, with a three-year compound growth rate of 30%. The exercise price is 12.01 yuan, which is inverted from the current stock price.

Profit forecast and investment rating: We are optimistic about the company's potential and development on the medical service circuit. It is estimated that in 2023-2025, the company's net profit returned to the mother is 1990/274/399 million yuan, and the PE corresponding to the current market value is 32X//23X/16X. Maintain a “buy” rating.

Risk warning: the risk of hospital side recovery falling short of expectations, risk of major policy changes, etc.