occurrences
On March 26, 2024, the company announced that in 2023, it achieved operating income of 1369.5 million yuan, +38.3% year over year, realized net profit before tax of 299.2 million yuan, +25.1% year on year, achieved adjusted net profit of 223.1 million yuan, +19.8% year on year; profit per share was 0.33 yuan.
Comment:
Strong growth in basic ophthalmology business, rapid recovery in demand
The company's revenue level grew steadily in 2023, profits increased year-on-year, and hospitals within the company quickly resumed operation after the epidemic. By dividing the revenue structure, the company's consumer ophthalmology service revenue in 2023 was 709 million yuan (+30.64%), basic ophthalmology service revenue of 654 million yuan (+39.54%); the company's overall gross profit margin was 45.40% (+1.50pct); the period expense ratio was 23.76%, year-on-year (+0.21pct); of these, sales expenses ratio was 6.18%, management expenses ratio 16.33%; net operating cash flow was 372 million yuan, +36.26% year over year. The revenue growth rate is strong, and profit growth is slightly slow, mainly due to factors such as impairment of goodwill and assets, and increased expenses such as talent and marketing.
On the demand side, in 2023, the number of outpatient visits to the company's hospitals was 11.287.19 million (944,500 in the same period last year) and 672.58 million in the same period last year (44,600 in the same period last year). Demand for elective medical services was affected by epidemic control, etc., and the number of visits declined year-on-year.
In 2023, the number of patients treated at the company's optometry center was 121,400 (102,000 in the same period last year), and the number of patients treated has gradually recovered since epidemic control was liberalized.
The quality of hospital assets is excellent, and epitaxial endogenous development is developing simultaneously
The company operated 31 ophthalmology hospitals and 29 optometry centers during the reporting period, spanning 7 provinces and autonomous regions in China, and successfully established Zhoushan Chaoju Eye Hospital and Zhangjiakou Chaoju Eye Hospital in 2023. In addition, the company also completed acquisitions of Beijing Mingyue Eye Clinic Co., Ltd., Bayannaoer Xudong Eye Hospital Co., Ltd., Wuyuan County Xudong Eye Hospital, and Ningxia Kaiming Optometry Co., Ltd. The company's mature hospitals have a good reputation. The hospital is rapidly climbing in the context of eliminating the impact of the epidemic. The newly acquired hospital assets are of excellent quality and are expected to continue to increase revenue and profits.
Investment advice: Maintaining a “buy” rating
The company is a private ophthalmology medical service group that is deeply involved in Inner Mongolia and covers the whole country. The booming demand in the ophthalmology medical service market and the shortage of high-quality medical resources provide the company with broad development space. We are optimistic about the company's ability to continue operating hospitals. From 2024 to 2026, the company is expected to achieve operating income of 16.42/19.61/313 billion yuan, +20%/19%/18% YoY; achieve net profit of 269/308/354 million yuan, +17%/15%/15% YoY; maintain a “buy” rating.
Risk warning
Risk of policy changes; risk of retaining physicians and employees; risk of increased risk of industry competition