occurrences

On January 30, 2024, the company released its 2023 performance forecast. The annual revenue was 46.2 billion yuan to 4.65 billion yuan, up 70.4% to 71.5% year on year; net loss due to mother was 280 million yuan to 370 million yuan, a year-on-year decrease of 68.6% to 76.2%; net loss after deducting non-return to mother was 400 million yuan, a decrease of 56.4% to 64.4% year on year. In the fourth quarter of 2023, revenue was 12.76 billion yuan to 1,306 billion yuan, up 60.1% to 63.9%; net loss due to mother was 0.58 billion yuan to 148 million yuan, a year-on-year decrease of 57.7% to 83.4%; net loss from non-return to mother was 0.51 million yuan to 141 million yuan, a year-on-year decrease of 57.9% to 84.8%. The performance was in line with expectations.

reviews

In 4Q23, single-quarter revenue reached a new high, and quarterly losses fell sharply year-on-year. (1) The company's revenue for the first three quarters of 2023 was 3.344 billion yuan, and the annual revenue is expected to be 4.62 billion yuan to 4.65 billion yuan; Q4 revenue was about 1,276 billion to 1,306 million yuan, higher than the single-quarter revenue for the previous three quarters (Q1-3 revenue was 10.59/11.34 billion, respectively). (2) Net loss due to mother for the first three quarters of 2023 was 222 million yuan, and the net profit loss due to mother for the full year was about 280 million yuan to 370 million yuan. Compared with a single quarter loss of 350 million yuan in the same quarter in 2022, the net profit loss amount due to a single quarter loss of 350 million yuan in Q4 in 2023 was drastically reduced, and the company is expected to achieve the monthly profit and loss target soon. (3) The company sold the assets of Shangluo Hospital in August 2023 and achieved an announcement in September, reducing losses.

The volume of inpatient services continues to increase, and brand influence is driving the share of overseas patients to increase. (1) The volume of inpatient services in the company's medical institutions continues to increase. According to the company's announcement, during November 2023, the highest number of daily beds in the Nanbei Campus of Xi'an International Medical Center Hospital reached more than 3,700, and the highest number of daily beds used by Xi'an Gaoxin Hospital reached more than 1,700. Compared to the first half of the year, the Nanbei Campus of Xi'an Gaoxin International Medical Center Hospital had a maximum of 3,307 patients and the highest number of patients hospitalized at Xi'an Gaoxin Hospital was 1,599. The company's three major hospitals have all been put into operation, and international medicine has developed a medical service capacity of 10,000 beds. As the number of medical visits and bed usage rates continues to increase, the steady growth in business performance has been shown. (2) The proportion of overseas patients continues to increase. In the third quarter of 2023, the company's medical institutions added 23 new hospitals cooperating with the medical consortium; the proportion of overseas patients attending high-tech hospitals reached 31.31%; the proportion of overseas patients attending central hospitals reached 37.93%. As the company's brand influence gradually increases in the region, the proportion of overseas patients will continue to increase in the future.

Profit Forecasts, Valuations, and Ratings

We raised the company's 2023 revenue by 10.5% from 4.2 billion to 4.64 billion yuan, maintaining 2024/25 revenue of 56/79 billion yuan. 2023/24/25 revenue increased 71%/21%/40% year-on-year; net profit to mother was 2.85/1.49/ 446 million yuan. Maintain a “buy” rating.

Risk warning

Risks such as bed profitability falling short of expectations, increased competition, and the impact of health-related policies.