Brief performance review

On August 29, 2023, the company released the 2023 semi-annual report. In 2023, H1, the company achieved revenue of 1.38 billion yuan (+55%), net profit of 230 million yuan (+358%), net profit of non-attributable income of 150 million yuan (+205%).

On a quarterly basis, in 2023, Q2 achieved revenue of 730 million yuan (+73%), net profit attributable to mother of 72 million yuan (+420%), net profit of 77 million yuan (+563%) after deducting non-attributable net profit of 77 million yuan (+563%).

Management analysis

The transformation and upgrading of the business structure has had remarkable results, and high-quality development was achieved in the first half of the year. By product, in 2023, H1, the company's refractive project revenue was 7.1 million yuan (+33%), optometry project revenue was 190 million yuan (+53%), cataract project revenue was 270 million yuan (+137%), and comprehensive eye disease project revenue was 200 million yuan (+71%). Since 2018, the company has actively adjusted its business structure and vigorously developed non-medical insurance settlement projects such as refraction and optometry, benefiting from overall consumption recovery. In terms of optometry, revenue from these two businesses has grown rapidly, and in terms of optometry, the company has fully promoted the fifth-generation fully digital and intelligent corneal plastic surgery technology. The gross margin of the optometry project is 45.67% (+2.91 pcts). In the cataract business, the company continues to promote multi-functional intraocular lenses and high-end surgical methods. The gross margin of this business is 43.37% (+8.06pcts). Furthermore, the gross margin of the comprehensive eye disease program was 19.77% (+4.60 pcts), which is clearly recovering.

Steadily advance the expansion plan and continue to empower performance growth. In H1 in 2023, Shanghai Fengxian Purui and Hubei Purui opened clinics one after another, and the company completed the acquisition of Dongguan **** Ophthalmology. It has already operated 27 chain ophthalmology specialist hospitals, covering all municipalities directly under the Central Government and more than 10 provincial capitals in the country, and many other new hospitals have completed site selection work and are in preparation. Hospitals newly opened in the past three years are expected to become the company's new endogenous growth engine in the future; at the same time, mergers and acquisitions can also provide the company with “immediate combat power”. Dongguan **** Ophthalmology was merged in January 2023, and achieved revenue of 100 million yuan and net profit of 28 million yuan in the first half of the year.

The scale effect is evident, and profitability is realized. With the expansion of the company's business scale, the bargaining power of the purchasing side has been further improved, procurement costs have decreased, and at the same time, the synergy of the company's chain business model has increased, and the cost side has been optimized. In 2023 H1, the company's sales expenses ratio was 15.8% (-2.2 pcts), management expenses ratio was 11.9% (-2.5 pcts), gross margin was 45.4% (+1.5 pcts), achieving a net interest rate of 10.8% after deducting non-attributable income.

Profit Forecasts, Valuations, and Ratings

The company continues to promote the “national chain integration+same city integration” layout, and we are optimistic that the company will maintain good profitability. It is estimated that the company's net profit from 2023-2025 will be 290, 327, and 445 million yuan, respectively, up 18%, and 12%, respectively, up 1310%, 13%, and 36% year on year. EPS will be 1.94, 2.19, and 2.97 yuan respectively, and PE corresponding to the current price will be 55, 48, and 36 times, maintaining the “increase in holdings” rating.

Risk warning

Hospital expansion falls short of anticipated risks; risk of medical safety accident disputes; risk of increased market competition; risk of shareholders' holdings reduction.