Key points of investment

On January 30, the company released its 2023 performance forecast: the expected operating income for 2023 is 4.61585-4.658.5 billion yuan (year-on-year increase of 70.27%-71.74%), net profit loss to mother of 37-280 million yuan, after deducting loss of 491-401 million yuan in non-net profit. It is estimated that 2023Q4 revenue will be 1,272-1,312 million yuan (up 12.2%-15.73% year on year), net profit loss to mother of 148-58 million yuan, after deducting non-net profit loss of 141-51 million yuan.

Looking at the quarter by quarter in 2023, the company's revenue continued to grow quarterly: 2023Q1 revenue exceeded expectations, and profit losses narrowed markedly; 2023Q2 achieved high revenue growth, and profit margins declined slightly month-on-month due to depreciation in Q2, but overall operating profit was still steady; 2023Q3 revenue fell 1.46% month-on-month, which is expected to be related to maintaining the Q2 level of beds during the July-August summer off-season. The difference is mainly due to disposal of Shangluo As a result, 2023Q3 achieved good profit growth compared to 2023Q1 revenue of +75 billion yuan, operating costs of +0.38 billion yuan, and period expenses of +016 million yuan, after deducting non-net profit of +012 million yuan; 2023Q4's revenue reached a record high, with a year-on-month increase of 12.2%-15.73%, after deducting non-net profit losses of 141-51 million yuan (2023Q3 minus non-net profit is a loss of 95 million yuan). Considering that Q4 generally has more accrued expenses, 2023Q4 as a whole The performance was in line with expectations.

The number of daily inpatient beds in the company's hospitals continued to reach new highs: in the first half of 2023, the highest number of daily beds in the northern and southern hospitals of central hospitals was 3307, 1,599 in high-tech hospitals, 3491 and 1701 respectively as of October 17, and 3,700 + as of November 17. The central hospital has maintained rapid growth since the opening of the North Hospital at the beginning of the year, and the high-tech hospital has reached full capacity in the first half of the year. It is expected to maintain a high level of around 1,700 beds after entering Q4.

The specialty business layout of the North Hospital is beginning to show results: revenue from 2023Q3 children, rehabilitation, and traditional Chinese medicine hospitals all increased by more than 25% month-on-month, chronic neurological diseases and psychosocial income all increased by more than 10% month-on-month, and revenue from plastic surgery hospitals increased by more than 6% month-on-month.

Profit forecasts and investment ratings

We forecast that the company's revenue for 2023-2025 will be 46.35/58.81/7.125 billion yuan, and net profit to mother will be -3.17/0.11/281 million yuan, respectively. The corresponding PS will be 3.00/2.36/1.95 times, respectively, giving it a “buy” rating.

Risk warning:

Health insurance fee controls are getting stricter, and the number of hospitalizations is not climbing as fast as expected.

Profit forecasts and financial metrics