The income of medical business increased rapidly in the first half of 2023, and the profit contribution increased significantly. Global Healthcare is a listed company controlled by central enterprises with health care as its main business. by the first half of 2023, it had listed 55 medical institutions and carried out a number of services such as equipment full-cycle management. and provide comprehensive financial solutions with financial leasing as the core. 23H1 realized revenue of 6.634 billion (+ 16.1%), of which medical and health business income was 3.646 billion (+ 33.8%), accounting for 55.0% of total revenue; realized profit was 1.194 billion yuan (+ 1.5%), of which medical and health business contributed 232 million (+ 61.1%); home net profit was 1.093 billion (+ 0.3%), of which hospital group business contributed 174 million (+ 88.0%). The gross profit margin of 23H1 is 34.1% (- 7.5pp). On the one hand, due to the change in income structure, the proportion of medical business income with relatively low gross profit margin has increased significantly, on the other hand, the gross profit margin of financial business has dropped by 8.7%, mainly due to the increase in financing costs caused by the adjustment of customer structure and the Fed's interest rate increase. The sales expense rate is 2.4% (- 1.5pp), the management expense rate is 8.1% (+ 0.4pp), and the parent net interest rate is 16.5% (- 2.6pp).

The financial business maintained a steady momentum of development, and profitability was under pressure due to the impact of interest rate hikes on the US dollar. 23H1's financial business achieved revenue of 2.988 billion, unchanged from the same period last year. The average rate of return on interest-bearing assets is 7.04%, the average cost ratio of interest-bearing liabilities is 4.33%, the net interest margin is 2.71% (- 1.04pp), and the net interest margin is 3.22% (- 0.94pp). Among them, the income end is affected by the intensified competition for high-quality projects and the overall decline in industry profitability, while the cost side is affected by the increase in foreign currency financing costs in the environment of raising interest rates in US dollars, and profitability is under pressure. In order to cope with the impact of the increase in interest rates of the US dollar, the company has actively adjusted and optimized its financing structure. The quality of the company's assets remained good. As of 2023H1, the company's net interest-bearing assets reached 71.765 billion, an increase of 10.0% compared with the end of the year; the rate of non-performing assets was 0.98%, and the provision coverage rate was 255.06%.

The profitability of hospital business is increasing, and the full-cycle equipment management business is making great strides. As of 23H1, the company has opened a total of 13893 beds in hospitals. The income of 23H1 delivered to medical institutions during the consolidated period was 3.528 billion yuan (+ 33.4%), the net profit margin was 5.28% (+ 0.93pp), the average annual income of 23H1 per bed increased to about 480000 yuan (+ 10.6%), the conversion rate of outpatient and hospitalization increased significantly, the overall bed utilization rate increased to 90%, the disease source structure improved, and the surgical ability continued to improve. 23H1 specialist and health industry achieved an income of 51 million, with a profit of 11.1 million in half a year. In August, the company acquired an 85% stake in Kaisixuan with 468 million, helping the company to speed up the national layout, the improvement of technical service capacity and the improvement of the spare parts system.

Investment suggestion: taking into account the impact of rising financing costs, the profit forecast is lowered. It is estimated that the net return profit for 2023-25 will be 19.51 shock 2.248 trillion (originally 20.55 2269), an increase of 3.2% over the same period last year. The current stock price corresponds to 3.51max of PE, 12.5%. The company's medical business has a lot of room to reshape its value, and its current valuation is cost-effective and maintains a "buy" rating.

Risk tips: new business development is not as expected, medical insurance control fees exceed expectations, and the risk of medical malpractice.