Revenue is forecast to grow 15% year over year
We expect the company to achieve a year-on-year growth rate of about 15% on the revenue side in 2023.
Key points of interest
Overall, steady growth is expected in 2023. 1-3Q23 achieved revenue of 38.696 billion yuan (+25.9% YoY). Considering the frequent occurrence of influenza in various regions starting in 4Q23, we expect or drive the release of corresponding drug and device categories. At the same time, we expect the company's revenue side to achieve a 15% year-on-year growth rate in 2023. It is estimated that in response to 4Q23, the year-on-year single-digit decline will continue to achieve steady growth under the high base effect. We believe there is room for continuous improvement in the company's net profit margin as cost reduction and efficiency continues to be controlled on the cost side and interest income from cash on hand.
The number of active users is expected to continue to rise. As of September 30, 2023, the company's annual active users reached 175 million, a net increase of 6.4 million over the last year of 2Q23. According to estimates, we expect the overall customer unit price of 1-3Q23 companies to drop, but continued brand marketing investment and low price competition strategies are expected to speed up traffic acquisition and increase the number of daily active users, further consolidating the competitiveness of the existing market.
Focus on the impact of a high base on growth performance in 2024 after clearance. During the 4Q22-1Q23 period, due to adjustments in epidemic prevention measures, residents' procurement demand for epidemic prevention and control materials and related drugs increased dramatically, driving the company to achieve high revenue growth in the current period. As the impact of the high base gradually clears up in 1Q24, we recommend focusing on the endogenous growth performance of each category in the subsequent quarters of 2024. Furthermore, in July 2023, the company launched the medical model “Beijing Medicine Thousand Investigations” to achieve AI upgrades for applications, products and solutions in different medical scenarios. We expect to continue to help innovate telemedicine services in the future.
Profit forecasting and valuation
Considering the frequent influenza situation in various regions starting in 4Q23, we are expecting or driving the release of corresponding drug and device categories. We raised our 2023 profit forecast by 2% to 1.8 billion yuan, basically keeping the 2024/2025 profit forecast unchanged. We maintain our target price of HK$41.2 (based on SOTP valuation), implying room for a 35.8% increase, and maintain our outperforming industry rating.
risks
Industry policy tightening has exceeded expectations, competition has intensified, and new business exploration has fallen short of expectations.