Events:
On June 27, 2023, the company issued a FY2023 performance announcement (April 1, 2022 to March 31, 2023). The company achieved a total operating income of 1.474 billion yuan, a decrease of 9.20% over the same period last year, a net profit of-218 million yuan, an increase of 69.30% over the same period last year, and a net profit of-220 million yuan, with a loss significantly narrowed (FY2022 net profit-701 million yuan).
Comments:
After the epidemic, the operation rebounded strongly, and the profit maintained a positive trend.
The company's FY2023 operating revenue decreased slightly compared with the same period last year, mainly due to the impact of COVID-19 epidemic, the company stores have different length of closure. During the reporting period, the company achieved a net profit of-220 million yuan, and a substantial reduction in the loss (FY2022 net profit-701 million yuan). The apparent loss was mainly due to the decrease in income caused by the epidemic and 194 million yuan in share remuneration expenses. Excluding the impact, the company's annual adjusted operating profit is 3.8 million yuan. From the perspective of profitability, the company's FY2023 achieved a gross profit of 247 million yuan, gross profit margin of 16.76% (- 3.97pct), EBITDA has been significantly improved, the EBITDA reached 262 million during the reporting period.
As of March 31, 2023, the company has 123 stores in 15 cities in China, including 114 oral clinics and 9 dental hospitals, as well as 914 experienced dentists. During the reporting period, the company opened four new dental clinics and one hospital, added 89 dental chairs, and expanded and upgraded four clinics, further strengthening the company's leading position in China's oral health care market. This year, the company also completed its first merger and acquisition since its listing, and acquired Wuxi Tongshan mouth in September 22, actively laying out the East China market. The company's steady growth of stores (operating > 6 years) during the reporting period, a total of 73, the number of profitable stores increased to 93, a steady pace of expansion, helping the company's future performance to continue to release steadily.
The company operates under the dual brands of "Ruier Dentistry" and "Ruitai Stomatology", forming a brand linkage and actively laying out the operation pipelines of high-end oral medical services in China's first-tier and new first-tier cities. As of the end of the FY23 fiscal year, the company has 52 Ruier Stomatology, 62 Ruitai Stomatology and 9 Ruitai hospitals.
Investment advice: maintain a "buy" rating
The company is a national chain of oral medical service institutions with a unique business model, with simultaneous development of endogenous extension, and ushered in a profit inflection point in fiscal year 24. In the fiscal year 2024-2026, we expect the total operating income to reach 18.39 million yuan (2.2798 billion yuan), compared with the same period last year (+ 25%), 24% (23%), and net profit (341,8157 million yuan), and + 115% (251%), 33%, of which the adjusted net profit of FY2024 is expected to reach about 95 million yuan (considering RSU fees); corresponding to PE103.03/29.35/22.01x. Maintain a "buy" rating.
Risk hint
Foreign exchange risk; policy change risk; regional operation risk; industry competition aggravating risk.