Key points of investment
Incident: The company announced that in 2023, the company achieved total revenue of 4,084 billion yuan (+27.39%, showing year-on-year growth rate, same below), net profit of 685 million yuan (+42.14%); adjusted net profit of 713 million yuan (+17.5%). After excluding the one-time impact of nucleic acid testing, the company's revenue increased 34.0% year on year, net profit increased 63.6% year on year, adjusted net profit increased 31.1% year on year, and ROE increased 2 percentage points year on year to 12.24% year on year. In the second half of 2023, the company achieved revenue of 2,316 million yuan (+38.3%) and net profit of 349 million yuan (+38.1%). The performance was in line with expectations.
The hospital business continues to develop well, and surgery/oncology business revenue continues to grow rapidly. By business, the company's hospital business revenue was 3.89 billion yuan, an increase of 35.4% after excluding the one-time impact of nucleic acid testing. Among them, outpatient revenue was 1,351 billion yuan (+43.2%), and inpatient revenue was 2,539 million yuan (+31.6%). Tumor-related business revenue was 1,778 billion yuan, up 23.6% year on year; the number of surgeries was 8,3770, up 34.6% year on year. The Group's gross margin in 2023 was 31.6%, up 0.5pp year on year after excluding the impact of nucleic acid testing.
The Group's service network continues to grow, and its regional advantages and brand influence are further strengthened. In 2023, the company successively acquired Yixing Haijia (which can open 500 beds, with sufficient space for more than 800 beds), Chang'an Hospital (which can open 1100 beds and has expandable land resources), and Qufu Chengdong Cancer Hospital (300 beds after relocation), showing excellent industry integration capabilities. Among them, Yixing Haijia Hospital and Chang'an Hospital increased their revenue by 30.8% and 28.9% year-on-year.
In addition, the second phase of the Chongqing Haijia Hospital and Danxian Haijia Hospital projects were put into use in 2023, and the number of open beds has now increased to 1,500. Since 2024, Chengwu Haijia Phase II has been put into use, and Dezhou Haijia Hospital has passed the tertiary general hospital inspection. With the successive use of new hospitals and existing hospital expansion projects, the size of the company is expected to continue to grow. Judging from the regional layout, Wuxi Haijia plans to set up 800-1000 beds, and Changzhou Haijia plans to set up 800-1200 beds, all of which are expected to be put into use in 2025. In addition, Hezhou Guangji Hospital Phase II and Suzhou Yongding Hospital Phase II can open 1,400 and 1,500 beds. The advantages of the Yangtze River Delta region continue to be consolidated.
Profit forecast and investment rating: Considering the impact of the company's newly built hospitals and the second phase of operation on short-term results, etc., we lowered the company's adjusted net profit from 2024-2025 from 1,065/1,332 million yuan to 920/1150 million yuan. It is estimated to be 1.40 billion yuan in 2026, and PE corresponding to the current market value is 19/15/13 times. Considering that the company's new hospital and phase II project will bring about an increase in revenue scale and profit recovery after opening and operation, as well as the company's excellent merger and acquisition capabilities, it maintains a “buy” rating.
Risk warning: the progress of hospital expansion or falling short of expectations; the increase in hospital profits or falling short of expectations; the risk of policy uncertainty, etc.