He has been deeply involved in neuromedicine for 20 years, and has accumulated a deep national layout. Since 2003, the company has always adhered to the tenet of “high-end technology serving the general public”, gradually exploring from a single hospital located in Beijing to a medical group with chain operations and a nationwide layout. Using the technical strength, talent transfer, management and service experience of the flagship hospital, Beijing Sanbo, the company operates a total of 6 hospitals in Yunnan, Chongqing, Fujian, and Henan provinces and cities, achieving an annual number of outpatient visits close to 500,000 and more than 40,000 hospitalized patients. Currently, Sanbo Neurology's technical capabilities in the field of neurology are in a leading position in the country, and revenue and profit have grown rapidly in the past few years. In the future, the company is expected to continue to drive development with high-end technology, explore innovations in social medical development models and business formats, and become a pathfinder and pioneer in college private hospitals.

The scope of neurosurgery medical services is vast, and the scale of private hospitals is constantly expanding. The overall size of the domestic medical market in China has grown along with the increase in medical demand, while medical demand has contributed to the increase in the number of private institutions. As of 2021, the number of private hospitals in China reached 24,766, accounting for 67.72%, and private medical institutions have become an indispensable and important part of the domestic medical system. In the neurosurgical medical market, public hospitals dominate with their academic reputation and medical resource advantages, while private institutions continue to expand with high-quality medical services and management advantages.

Advanced technology builds competitive advantages, and group operations help the country's expansion. Since 2014, the company has explored expansion outside of Beijing through various means such as self-construction, joint ventures, and restructuring, and has set up a number of neurology specialist hospitals in cities such as Kunming, Fuzhou, and Zhengzhou, with leading technical standards in the region, taking a leading position in terms of technology. The company has also actively taken advantage of restructuring opportunities to set up two general hospitals in Chongqing. The net interest rates for the 2022 Chongqing World Expo Chang'an and the Chongqing Three Expo Jiangling were 13% and 11%, respectively, with good profitability. In the future, the company plans to build a neuromedical service network covering key regions of the country, effectively expand the coverage of the company's medical resources, and ultimately build a leading scale and first-class technology brain medical group by: 1) establishing medical partnerships with tertiary general hospitals or second-level brain hospitals, and 3) establishing technical training and two-way referral cooperation with level-2 or level-1 hospitals.

Investment suggestion: Since February 2023, the volume of hospital treatment in China has gradually recovered. We expect the volume of in-hospital treatment to continue to recover in 23 years. Combined with the latest situation in the first three quarters of 2023, we expect the company's revenue in 2023-2025 to be 12.35, 13.74 and 1,534 billion yuan respectively, up 15.6%, 11.3% and 11.7% year on year. Considering that the company's hospital projects under construction will continue to advance in the next three years, the company's net profit for 2023-2025 is expected to be 0.76, 0.79 and 75 million yuan respectively, up 20.3%, 3.7%, and -4.8% year on year. For the first time coverage, a “recommended” rating was given.

Risk warning: medical service price adjustments exceed expectations; nationalized chain expansion falls short of expectations; medical accidents, etc.