Various businesses have recovered steadily, and the industrial sector has increased 36% year-on-year

In the first half of 2023, the company achieved total revenue of 4.521 billion yuan, down 5.03% from the same period last year, mainly due to objective factors in the same period last year. The scale of the third-party laboratory testing business increased significantly. However, after the elimination of objective factors in the same period this year, the scale of the third-party laboratory testing business fell 87.72% during the same period, which had an obvious impact on the overall revenue base; the company's main business revenue outside of third party laboratories increased 7.08% over the same period, and sales scale growth stabilized. In the first half of the year, the company achieved net profit attributable to shareholders of listed companies of 175 million yuan, an increase of 9.67% over the previous year. Overall, due to the influence of the domestic macroeconomic environment and medical policies, medical treatment activities such as hospital outpatient visits and surgeries are gradually recovering, and the company's various businesses are also recovering steadily.

By business, the intensive business/regional inspection center business achieved revenue of 1,237 billion yuan, an increase of 3.46% over the same period last year. Mainly because medical institutions are affected by the health policy environment, some medical institutions' bidding work has been suspended, and the progress of some contracted customers has been delayed to a certain extent; the industrial sector has grown rapidly, achieving revenue of 289 million dollars in the first half of the year, an increase of 36.63% over the same period last year. The company invested 65.94 million yuan in R&D expenses, an increase of 11.85% over the previous year. It continued to increase R&D investment in IVD products, information digitization and other products to enhance comprehensive R&D capabilities.

Develop a large model of inclusive AI medical services. B-side/C-side two-wheel drive With the development of AI big model technology, the company continues to increase investment in digital product development, actively cooperates with major domestic model technology companies such as Huawei to develop a large-scale model of inclusive AI medical services. Facing B-side medical institutions, it develops large-scale AI medical model products such as smart medicine, smart services, and intelligent management to improve the level of clinical diagnosis and treatment, patient service, and operation management; at the same time, for ordinary people on the C-side, develop a professional and credible healthcare model to provide the public with professional and credible testing Interpretation of results, scientific and accurate medical and health science popularization, and active and friendly health management provide scientific, individualized, and friendly health management services. In the first half of the year, the “Huijian - Artificial Intelligence Interpretation and Inspection Report System” AI product launched by the company was promoted and used by more than 40 medical institutions in China, and received good recognition and praise from customers.

On June 6, 2023, the company and HUAWEI CLOUD Computing Technology Co., Ltd. formally signed a comprehensive strategic cooperation agreement in Shanghai. The two sides will build a large-scale AI model for the medical field based on the HUAWEI CLOUD platform to achieve smart medical services. According to the agreement, based on Runda Medical's deep industry experience and service resource advantages in the field of smart testing and smart medical services, combined with HUAWEI CLOUD's leading technology, resources and own digital transformation practices in AI, cloud computing, big data, and the Internet of Things, the two sides will cooperate closely in smart healthcare, enterprise digital transformation, and ecological construction to achieve complementary advantages and win-win value, and jointly help high-quality innovation and development in the smart medical field.

The AIGC management measures were officially implemented, and the “Interim Measures for the Administration of Generative Artificial Intelligence Services” jointly issued by seven departments including the State Internet Information Office was officially implemented on August 15. It is the first regulatory policy for the generative artificial intelligence industry in China. While implementing regulations and rules, the “Measures” also further encourage innovative applications of generative artificial intelligence technology in various industries and fields, support various organizations to collaborate in generative artificial intelligence technology innovation, data resource construction, transformational application, risk prevention, etc., and promote the construction of generative artificial intelligence infrastructure and public training data resource platforms. We believe that while clarifying industry regulations, the relevant policies have also further promoted the accelerated implementation of generative artificial intelligence applications. With the gradual improvement of the regulatory system, the generative artificial intelligence industry will soon usher in an era of standardized commerce.

Investment advice and profit forecasting

Runda Medical is a comprehensive medical laboratory service provider based in East China and covering the whole country. It has formed a unique comprehensive IVD business service system and has accumulated a large number of high-quality hospital-side resources. The company actively lays out a large-scale model of inclusive AI medical services, with B-end/C-side two-wheel drive, which is expected to open up new growth space. The company's EPS for 2023-2025 is expected to be 0.88, 1.07, and 1.29 yuan, respectively, and the PE corresponding to the current stock price is 16.02 times, 13.22 times, and 10.90 times, respectively. It is covered for the first time, and given a “buy” rating.

Risk warning

Research and development of large models has fallen short of expectations; changes in medical industry regulatory policies; increased competition in the industry, etc.