Event

On August 23, 2023, the company released the 2023 mid-term report. During the reporting period, the company achieved operating income of 2.21 billion yuan, + 106.91% compared with the same period last year. The net profit returned to the mother was-222 million yuan, an increase of 62.69% over the same period last year. Non-net profit was deducted from-255 million yuan, reducing losses by 55.95% over the same period last year. In 2023, the operating cash flow of H1 company reached 410 million yuan, an increase of 302.55% over the same period last year, and a gross profit margin of 7.76%, an increase of 26.04 pct over the same period last year. The loss reduction in the first half of 2023 was more obvious than that in the same period last year, and the overall performance was in line with expectations.

Event comment

Overall performance is in line with expectations and losses continue to narrow

The company's overall performance in the first half of 2023 was in line with expectations, with rapid revenue growth and accelerated narrowing of losses. In a single quarter, the company's revenue in the second quarter of 2023 was 1.151 billion yuan, up 50.78% from the same period last year; the net profit was-148 million yuan, up 11.83% from the same period last year; the net profit from non-return was-152 million yuan, up 7.72% from the same period last year; and the overall gross profit margin was 7.37%.

High-tech hospitals: 2023H1 revenue of 710 million yuan, an increase of 89.02% over the same period last year, and a net profit of 34.4901 million yuan, an increase of 140.32%. The number of outpatients and emergency departments was 543500, an increase of 71.88 percent over the same period last year, and the number of hospitalizations was 30500, an increase of 98.05 percent over the same period last year. The number of operations was 8669, an increase of 92.05% over the same period last year.

2) Central hospital: 2023H1's revenue was 1.425 billion yuan, an increase of 123.02% over the same period last year, and the net profit was-154 million yuan, reducing losses by 54.79% over the same period last year. The number of outpatients and emergency departments was 524600, an increase of 163.49 percent over the same period last year, and the number of hospitalizations was 55400, an increase of 123.39 percent over the same period last year.

The number of operations was 26200, an increase of 104.69 percent over the same period last year. The district trial operation of the North Hospital of the Central Hospital in January 2023, the diagnosis and treatment ability continues to improve, the central hospital has a maximum daily out-patient and emergency service of 4525 person-times, and a maximum of 3307 patients.

3) Shangluo Hospital (divested): H1 realized revenue of 46.3046 million yuan and net profit of-27.3633 million yuan in 2023. The 99% stake in Shangluo Hospital completed the industrial and commercial change on August 22, 2023. After the completion of delivery, the company is light, and the balance sheet structure is expected to continue to improve.

Investment advice: maintain a "buy" rating

The company's revenue and profit in a single quarter showed a good growth trend, and the second half of the year entered the peak season of offline diagnosis and treatment and serious medical care. We are optimistic about the long-term development value of the company. It is expected that the company's high-tech hospitals will develop steadily and new beds will continue to climb. Projects such as the North and South Hospital District of the Central Hospital & Proton Therapy Center under construction provide strong support for the company's long-term development and maintain its "buy" rating. It is expected that the company will achieve operating income of 42.76 yuan in 2023-2025, with an operating income of 58.97 billion yuan, compared with the same period last year. + 57.7%, 37.9% and 21.3%, respectively, and will achieve a net profit of-212, 131, and 470 million yuan, compared with the same period last year. + 82.0%, 161.9%, 258.6%, and 24 years PE134.84/37.60x.

Risk hint

The risk of medical policy change, the risk of bed climbing speed is not as fast as expected, the risk of shortage of human resources, the risk aggravated by market competition.