The company's 1H23 continues to promote strategic transformation and reduce its low strategic coordination business. We expect 1H23 to record a 15-20% year-on-year decline in revenue, but the improvement in gross margin is expected to hedge against the decline in revenue, and the adjusted net loss will still achieve a year-on-year reduction. We expect that the reduction of the low strategic collaboration business will be basically completed by the end of the year, the company's revenue will return to growth by 2024E and break even by 2025E or earlier. Maintain the hold rating and the target price of HK $20.0.

1H23 performance outlook: the company takes the initiative to reduce the revenue pressure caused by low strategic cooperation business, and is expected to continue to reduce losses through gross profit margin improvement. Revenue: 1H23 continues to promote strategic transformation and reduce low strategic coordination business. We expect revenue to be under pressure. Under the low base of 1H22, there will still be a 15-20% decline compared with the same period last year; among them, the F side (financial customers) may be relatively more robust. According to Ping An Insurance disclosed data, 1H23 Ping an life insurance / health insurance / property insurance premium income grew steadily, with a year-on-year rate of + 9% and "13%", which is good for the sales of Ping An Healthcare And Technology's insurance policy nested products. Gross profit margin: low strategic cooperation business gross profit margin is low, after the reduction of business is expected to significantly increase the gross profit margin level (2H22 gross profit margin + 8.0pcts), it is expected that 1H23 gross profit margin will continue to improve; during the period expense rate: it is expected that the rate of sales and management expenses is basically the same as the same period last year, while the rate of R & D expenses increases slightly due to the continuous strengthening of digital capabilities. Net loss: it is expected that the improvement in 1H23 gross profit margin is expected to hedge against the impact of declining revenue, and the adjusted net loss will still narrow compared with the same period last year.

2024E revenue is expected to return to the growth track and maintain 2025E to achieve break-even expectations. 2023 is still the company's strategic adjustment period, we expect 2H23 revenue growth to improve, but will still record a 14% decline for the whole year, 2024E revenue is expected to return to the growth track after the accelerated contraction of low strategic collaboration business during the year. With the continued improvement in gross profit margin, we maintain the expectation that the company will break even in 2025E, if the improvement in gross margin and expense rate is more significant than we currently expect, or we are expected to break even by 2025E.

Long-term growth prospects are still broad, short-term waiting for the stock price catalyst. The company's strategy clearly focuses on F-end and B-end customers with higher willingness to pay. In 2022, the annual penetration rate of F-end paid users is only 15% (the number of individual customers of vs Ping an Group exceeds 200 million), and the B-end penetration rate is 20%. There is still a lot of room for development in the long run. Short-term attention can be paid to: 1) the shrinking rhythm of low-synergy business; 2) the break-even point; 3) the implementation of drug management laws and regulations and other policies will be introduced in the future.

Maintain the "hold" rating and target price of HK $20.0. The company's 1H23 accelerates the reduction of its low strategic collaboration business in preparation for subsequent light travel. We estimate that 2023E/24E/25E revenue is-14%, 16%, 17%, 3.3x, 2024E, S, HK $20.0 and "hold" rating. The target valuation multiple is lower than the 3-year historical average of 0.6 standard deviations.

Investment risk: policy change; B-end / F-end user acquisition and strategic upgrade progress is not as expected.