Investment events: (1) The company recently signed strategic agreements with companies such as Sannuo Biology and USMILE to strengthen alliances to enhance the overall competitiveness of the company's medical services and health management. (2) The company appoints Mr. Li Dou as the chairman of the board of directors, executive director and CEO of the company.
Strong alliances, increase strategic cooperation, and enhance the competitiveness of products and services. Recently, the company has strategically cooperated with companies such as Sannuo Biotech and USMILE. The strategic cooperation between the company and Sannuo Biotech promotes the intelligent management of chronic diseases such as diabetes, relying on the technical advantages of Sannuo Biotech's intelligent hardware equipment and the company's professional medical and health service capabilities. The company and Usmile will explore a new O2O model of oral health management through the combination model of “oral care products+medical services+health management”. The company will increase strategic cooperation with high-quality enterprises to accelerate the improvement of the competitiveness of the company's products and services.
The implementation of the new strategy has achieved remarkable results, and the operating indicators are beautiful. The company has accelerated the implementation of Strategy 2.0, and various businesses have progressed smoothly. As of H1 in 2023, the number of LTM paid users of the company reached 45.1 million, of which the number of F-side LTM paid users reached 38.1 million, and the number of B-side LTM paid users reached 3.9 million, up 5.8%, 11.7% and 32.4% respectively from the end of 2022; the cumulative number of B-side service enterprises reached 1198, while at the end of 2022 it was only 978, an increase of 22.5%. In terms of revenue, during the reporting period, the F-side strategic business revenue was 1,078 million yuan, up 12.6% year on year, and the B-side strategic business revenue was 449 million yuan, up 88.9% year on year. The data shows that regardless of the number of paying users, the number of B-side enterprise customers, or the related revenue scale, all showed good growth, and the company's new strategy is being promoted at an accelerated pace.
Gross margin has increased, net profit loss has been significantly reduced, and the company's operating efficiency has improved. Due to the company's optimized product structure, the company's comprehensive gross margin reached 32.2% in the first half of 2023, compared to only 26.6% in the same period last year, an increase of 5.6 percentage points over the same period last year. The increase in gross margin was remarkable. Net profit and loss were also significantly reduced. In the first half of 2023, there was a loss of 245 million yuan, compared to 464 million yuan in the same period last year.
Investment advice: Due to reasons such as the company's optimization of the product and service structure and the adjustment of low-strategic collaboration businesses, etc., we have adjusted the company's profit forecast. Before the adjustment, we expect the company's revenue for 2023/2024 to be 6.5 billion 75/7.483 billion yuan and net profit of -7.81/-368 million yuan respectively. After adjustments, we expect the company's revenue for 2023/2024/2025 to be 4622/53.06/6.096 billion yuan, respectively, and net profit of -508/-2.67/-62 million yuan, respectively. Considering the high growth of the Internet medical industry, the company's strong competitive advantage, and continuous optimization of business quality, we gave the company a “buy” rating.
Risk warning: business development falls short of expectations, policy implementation is slow