Matters:
Recently, the company signed strategic agreements with companies such as Sannuo Biotech and usmile to enhance the company's overall competitiveness in medical services and health management. In addition, the company has appointed Mr. Li Dou as the chairman of the board of directors, executive director and CEO of the company.
Commentary:
The company reached deep strategic cooperation with Sannuo Biotech and usmile. Relying on its expertise in the field of healthcare, the company collaborates with Sannuo Biotech's smart hardware equipment technology, “product promotion of smart hardware+ services for chronic disease management”, “exploration and development of digital therapy based on CGM”, and “integration of innovative payment model - CGM+ insurance” to jointly promote deep innovation in products, services and models from three strategic cooperation directions to build more scientific and easier to use chronic health care solutions. The company reached a strategic cooperation with the usmile brand. Through the combined service form of “oral care products+medical services+health management”, the company carried out all-round strategic cooperation in health management, products+health services, etc., to accelerate the competitiveness of products and services.
Executive changes help long-term development. Recently, the company appointed Mr. Li Dou as the chairman of the board of directors, executive director and CEO of the company. Mr. Li Dou has held senior management positions in various fields such as medicine, FMCG, insurance, and pension, and has rich experience in understanding consumer needs, strategic deployment, service system construction, and digital operation.
The results were remarkable after the implementation and promotion of the new strategy. The company accelerates the promotion of Strategy 2.0, including reducing and adjusting low strategic collaborative businesses, operating and optimizing other businesses, and actively exploring innovative businesses. As of H1 in 2023, the F-side strategic business is developing steadily, the B-side strategic business is growing rapidly, the C-side business continues to be laid out, and the second growth curve is gaining strength. On the revenue side, F-side revenue was 1.08 billion yuan, a year-on-year growth rate of 12.6%; B-side revenue was 450 million yuan, a year-on-year growth rate of 88.9%. Looking at the number of LTM paid users, the number of F-side LTM paid users was 38 million, up 13.3% year on year; the number of B-side LTM paid users was 3.9 million, up 90.2% year on year. The data shows that both the revenue scale and the number of paying users showed good growth, and the results of the new strategy were remarkable.
Optimistic about the company's long-term development and maintaining a “recommended” rating. Based on the company's latest business situation and the company is still in the strategic 2.0 adjustment period, we adjusted the company's performance forecast. The estimated revenue for 23-25 was 45.11 billion yuan, 51.53 billion yuan, and 5.846 billion yuan (previous forecast values were 58.52, 68.51, and 8.023 billion yuan), respectively, -26.8%, +14.2%, and +13.5% compared to the same period. Since operating income is an important indicator for measuring internet healthcare, we used PS for valuation and gave a target PS of 4 times in 2024, corresponding to a target price of HK$20.28. Maintain a “Recommended” rating.
Risk factors: Member product expansion falls short of expectations, Internet medical policy risks, etc.