Main points of investment
Investment logic: (1) the for-profit general hospital belongs to the extremely scarce target, with high barriers and rigid demand; (2) the core general hospital has significant advantages in software and hardware, and enters the stage of climbing and harvesting after high investment. The second half of the year is expected to usher in a monthly break-even inflection point. (3) in the long run, focusing on "comprehensive + characteristic specialties", 10,000 beds will bring more than double the income space, and characteristic specialties are expected to bring the second growth curve.
High-level medical resources are in short supply, the company is based in Xi'an, Shaanxi Province, and further radiates the central and western regions. The beds of tertiary hospitals in China have been nearly saturated or overloaded for a long time. At the end of 2021, the number of tertiary hospitals was only 8.96% of the total number of hospitals, but 57.47% of diagnosis and treatment and 55.81% of hospitalization needs were borne. Xi'an is the population center of the northwest region, the market demand for medical services is large, but the supply of medical resources per capita is insufficient. In addition, the rapid construction of the high-tech core area of Xi'an, where Xi'an International Medical City is located, brings a strong demand for medical institutions and other supporting facilities. At the same time, Xi'an is attractive to patients in and around the province and has a certain radiation effect. Since 2023, the proportion of non-local patients in the company has risen to 30%, higher than the pre-epidemic level. The supply and demand of medical resources provides a great opportunity for the company to further develop in the region, and the company is expected to gradually develop into a high-quality medical service center for the central and western regions of China.
The company's core general hospital has significant advantages in software and hardware, and after high investment, it enters the stage of climbing and harvesting. The company's high-tech hospitals and central hospitals have excellent hardware, the background of military hospital restructuring is rich in expert resources, and the brand strength is improved rapidly. High-tech hospital is China's first social capital to set up a third-class first-class hospital, after the opening of the second phase, the number of beds has been increased to 1500; the International Medical Center Hospital has passed the JCI certification with high scores in May 2021, with sufficient planned beds of 5037. Since 2023, the two core hospitals have shown strong brand strength and performance resilience. In addition, the International Rehabilitation Medical Center (North Hospital District of the International Medical Center Hospital) has been in trial operation, and after 3600 beds have been put into operation, the company has more than 10,000 beds, and the climbing of 10,000 beds has laid the foundation for future performance growth. We assume that the output of the full-load single bed in the south and north districts of the high-tech hospital / central hospital is 100,120,000,000 yuan respectively, then when all 10,000 beds are put into use, the income for the company will reach 10 billion yuan, which has more room for growth than the income volume of 2.7 billion yuan in 2022.
The company focuses on "comprehensive medical care + characteristic specialties", which is expected to bring a second growth curve: the company actively arranges medical services with strong consumer attributes, such as medical beauty, assisted reproduction, rehabilitation and high-end quality medical projects. The advantage of license plate resources has become a booster for the landing of new business. In October 2022, the company was approved for conventional in vitro fertilization, embryo transfer and intracytoplasmic sperm microinjection, with the ability to run 40,000 IVF cycles per year, which is expected to meet the growing demand for regional assisted reproduction. In terms of tumor treatment, the Central Hospital was approved by the "Proton radiotherapy system" in October 2020, becoming the only licensed medical institution in Northwest China. It is expected to be completed in 2025 and will provide accurate medical services for cancer patients. In addition, the company's central hospitals and high-tech hospitals have become the second and third Miaoyou Medical Alliance member hospitals in China, and its hospital business structure is expected to tilt towards difficult and serious, medium-and high-end projects, improve industry influence and optimize business structure. improve profitability.
Profit Forecast and Investment rating: we expect 2023-2025 net profit to be-117max, 225max, 482 million, and 2024max, corresponding to the current market capitalization, PE of 90max, 42X in 2025. As a scarce target of private general hospitals, the core hospital entered the stage of climbing and harvesting, covering it for the first time and giving it a "buy" rating.
Risk hint: under the intensification of market competition, bed climbing is not as good as expected risk, policy risk and so on.