Runda signed a cooperation agreement with Huawei and Liu Yao: On December 9, the 2023 HUAWEI CLOUD Digital Health Innovation Summit was held in Dongguan, Guangdong, with the theme of “Health Inclusiveness and Digital Intelligence”. At the meeting, HUAWEI CLOUD signed comprehensive cooperation agreements with Guangxi Liuyao Group and Runda Medical, and formally reached a comprehensive cooperative relationship. The three parties will actively carry out comprehensive and in-depth cooperation in fields such as smart pharmacies, smart hospitals, and smart medical clouds.
Together with Huawei, the white paper “Urban Smart Healthcare Cloud Solution” was launched by HUAWEI CLOUD and Runda Medical. It analyzes the current background and current state of smart medical cloud development in China, introduces the cloud infrastructure layer, data security layer, smart medical layer, business application layer, service support layer, etc., and provides an in-depth interpretation of the advantages, expected effects, and value of the urban smart medical cloud solution. The solution combines the innovative capabilities of smart medical care to provide medical institutions with a series of intelligent solutions (such as large models to assist clinical decision-making, large models to assist patient services, big models to assist scientific research, big models to assist hospital operation and management, etc.).
Huawei's cooperation was further upgraded: In June of this year, Runda Medical signed a cooperation with HUAWEI CLOUD and quickly launched products such as “Good Doctor Xiaohui” to help Shanghai Changhai Hospital achieve rapid digital transformation and become a model unit for the digital transformation of Shanghai's cities. The signing of this cooperation and the publication of the white paper is a further upgrade of the cooperation between the two sides. We continue to be optimistic that the two sides will continue to promote smart medical products, jointly promote the application of smart medical clouds, and promote the upgrading of the digital health industry. Liuyao cooperation will accelerate commercialization on the B/C side: Liuyao is a regional pharmaceutical distribution company. According to the company's 2022 annual report, the company has set up subsidiaries in all core cities in Guangxi, and its business covers all level-II hospitals in the region. Guizhong Pharmacy, a subsidiary of Liu Yao, has 736 pharmacies. It is the first company in Guangxi to launch DTP pharmacy business and online pharmacy business, and has 174 DTP pharmacies. We believe that the signing of this cooperation agreement will strongly promote the commercialization of the Runda AI model in hospitals in the Guangxi region (2B business). Empowering pharmacies through the “smart medical cloud” will provide pharmacy end customers with value-added services such as auxiliary analysis of test reports, improve the service capabilities of physical pharmacies, and upgrade pharmacy functions. This is also an important innovation in the 2C terminal application scenario of Runda's large model, and is expected to become one of its many 2C profit models.
Maintaining a “buy” rating: We continue to be optimistic about the steady growth of the company's main business and the commercialization prospects of AI products on the 2B and 2C side. Considering the influence of objective factors in the medical sector this year, the company's profit forecast for 2023-2025 was slightly lowered. Net profit for 2023-2025 is estimated to be 472 million yuan, 552 million yuan, and 667 million yuan respectively (previously 504 million yuan, 620 million yuan and 753 million yuan), corresponding price-earnings ratios of 30 times, 26 times, and 21 times respectively (this profit forecast does not take into account the possible high elasticity of AI products), continue to be optimistic about the broad prospects of the company's AI products and maintain the company's “buy” rating.
Risk warning: R&D risks, increased market competition, commercialization falling short of expectations