New mileage: the "first stock" of general hospitals that have entered the period of profitability improvement. Since New mileage Health became the controlling shareholder in 2022, through implementing high-quality development planning, strengthening operation management and budget achievement, and continuously reducing costs and efficiency, the company's operation has returned to normal, and medical service business income has maintained steady growth. profitability has improved significantly. After combing the basic situation of the company's hospitals, we believe that its hardware conditions and diagnosis and treatment level are in the leading level in the local area, which is conducive to continuously attracting patients in the region to seek medical treatment; the regional economic development, health insurance income and expenditure and participation rate are in a good state, which is conducive to the continuous growth of diagnosis and treatment demand. With the increase in the number of beds, the increase in the income of single beds and the increase in bed utilization after the completion of the new hospital area, we believe that the company's medical service business income is expected to maintain steady growth. In the long run, benefiting from the positive factors such as the embodiment of scale effect, the improvement of profitability of its hospitals and the optimization of income structure, the profit margin of the company's medical service business still has room to improve.

Actively promote fixed growth, epitaxial development can be expected. At present, the company is actively promoting the healthy issuance of new mileage to the controlling shareholders. after the completion of the fixed increase, the company's capital reserves will be continuously improved and the financial structure will be further optimized. New mileage Health also promises to gradually promote business integration and solve the problem of inter-industry competition. as one of the largest comprehensive medical groups in China, it has a number of hospitals with good asset quality. if external assets are injected into listed companies in the future, the medical services business is expected to develop by leaps and bounds.

Earnings forecasts and valuations. We estimate that the company's operating income from 2023 to 2025 will be 3.533 billion yuan, 4.131 billion yuan and 4.933 billion yuan respectively, with year-on-year growth rates of 12.1%, 16.9% and 19.4%, respectively. The net profit of homing was 180 million yuan, 287 million yuan and 392 million yuan respectively, with year-on-year growth rates of 16.1%, 58.8% and 36.7% respectively. Based on the closing price on October 9, the corresponding PE was 63.8,40.2 and 29.4 times, respectively. For the first time, coverage gives a "buy" rating.

Risk tips: the progress of additional issuance / asset injection is lower than expected; the progress of hospital expansion slows down, resulting in lower-than-expected income growth; the bed utilization rate after the completion of the new hospital area is lower than expected, affecting profitability; the risk of medical malpractice; the pharmaceutical sector is affected by collection and other adverse policies, and its performance is lower than expected.