Puri Ophthalmology announces 2023 interim results. In the first half of 2023, the company achieved operating income of 1,378 million yuan, an increase of 54.88% over the previous year; net profit of 235 million yuan, an increase of 358.07% over the previous year; net profit after deducting non-return net profit of 149 million yuan, an increase of 204.63% over the previous year. Among them, Q2 achieved revenue of 728 million yuan in a single quarter, an increase of 72.85% over the previous year; net profit of Gimu was 72,433 million yuan, an increase of 420.38% over the previous year.

The national layout continues to advance, and profitability is increasing rapidly. In the first half of 2023, Shanghai Fengxian Purui and Hubei Purui opened clinics one after another. At the same time, the acquisition of Dongguan **** Ophthalmology was also completed. As of June 2023, the company had operated 27 chain ophthalmology hospitals, covering all municipalities directly under the Central Government and more than 10 provincial capitals in the country. According to the company's interim report, the newly consolidated Dongguan **** achieved revenue of 110 million yuan and net profit of 27.75 million yuan. After deducting the overall revenue of Dongguan **** Company, the overall revenue of Dongguan **** Company was 1,277 million yuan, an increase of 43.52% over the previous year. Furthermore, the company's gross margin for the first half of 2023 was 45.38%, up 1.5 pp from the previous year. After deducting non-net interest rate, it had reached 10.78%, up 5.30 pp from the same period last year.

The consumer business is progressing steadily, and the cataract business has clearly recovered. According to the company's interim report, in the first half of 2023, refractive business revenue reached 709 million yuan, up 33.37% year on year; optometry reached 191 million yuan, up 52.87% year on year, all showing a good growth trend. The cataract business achieved revenue of 275 million yuan, an increase of 137.04% over the previous year, mainly due to the fact that after the impact of the epidemic abated, the backlog of demand for cataract surgery in the previous three years was fully released. At the same time, the company actively promoted multifunctional intraocular lenses and high-end surgical methods, which stimulated the development of the high-end cataract business. Furthermore, the comprehensive eye care business achieved revenue of 197 million yuan, an increase of 70.71% over the previous year.

Profit forecasts and investment recommendations. Based on the continuous advancement of the company's national layout and the rapid recovery trend in cataracts, eye diseases and other fields in the first half of the year, we raised the company's revenue for 2023-2025 to 27.66, 3600 million yuan, and 4.686 billion yuan (original values were 2,482, 32.33, and 4.208 billion yuan respectively). Considering the steady expansion of the company's business scale and gradually maturing profitability, we gave PS 8X a valuation in 2023, with a corresponding reasonable value of 147.89 yuan/share, and gave it a “buy” rating.

Risk warning. Chain business model expansion risk, medical accident risk, and health insurance fee control risk.