Incident: The company released its 2023 annual report, achieving operating income of 3.16 billion yuan, a year-on-year increase of 2.3%; realized net profit of 360 million yuan, an increase of 229.5% over the previous year; realized net profit without deduction of 330 million yuan, an increase of 178.5% over the previous year.
Revenue from healthcare informatization has grown steadily, and profits have recovered significantly due to improved human efficiency. 1) Healthcare information technology business: Achieved revenue of 2.85 billion yuan in 2023, up 12.7% year on year, of which core product software sales and technical services achieved revenue of 2.37 billion yuan, an increase of 14.6% year on year. Although objective factors have had a certain impact on the release of industry orders, the amount of new orders signed in the company's medical and health information technology business still showed a year-on-year upward trend. 2) Internet medical business: Achieved revenue of 310 million yuan in 2023, down 44.5% year on year. Among them, Weining Technology signed a new contract amount of 270 million yuan, an increase of 122% over the previous year. The company's Internet medical business is still in the sales expansion and R&D investment stage, but due to active strategic adjustments, losses decreased by 44.6% year-on-year. In addition, during the reporting period, the company carried out personnel optimization adjustments. In 2023, per capita income was 506,000 yuan, up 12.8% year on year; comprehensive gross margin reached 45.0%, up 1.31pp year on year, and the cost ratio reached 32.9%, reducing 1.46pp year on year, boosting the rapid recovery of profitability.
The “1+X” strategy has been upgraded, and the WinEX benchmark continues to be implemented. The company continues to advance the “1+X” strategy. In 2023, WineX expanded hundreds of customers, helped launch benchmark customer projects such as Peking University People's Hospital and the First Affiliated Hospital of the Army Military Medical University, and formed a complete set of systematic and replicable development and deployment mechanisms to push WinEx towards agile delivery. At the same time, the company's WineX DNA (data platform) architecture was newly upgraded, and successfully won projects such as the integrated platform and data center for the 4 hospitals of the Army Military Medical University in Chongqing, the Southern Medical University Shenzhen Hospital medical digital center construction project, and the hospital operation decision support system.
During the reporting period, the company added more than 60 million-level projects in the fields of smart hospitals and hospital platforms, medical communities/medical consortia, primary health care, etc.
With the forward-looking layout of AI+ medical informatization, the recovery of the downstream economy is worth looking forward to. In October 2023, the company officially released WinGPT, a vertical model for the medical field, and is built into a full range of products in the form of WineX Copilot, an intelligent medical assistant. It has been integrated into more than 100 clinical application scenarios, and is being implemented in leading hospitals in Beijing, Shanghai and other places. According to IDC, the company's share of domestic hospital core systems reached 12.3% in 2022, ranking first for three consecutive years, with a clear leading advantage. We believe that with downstream demand-side recovery, the company's performance is expected to accelerate.
Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 0.23 yuan, 0.33 yuan, and 0.45 yuan respectively. Considering that medical information technology construction is expected to usher in a new investment cycle, the company, as an industry leader, is expected to benefit from increased concentration after the difficult situation is reversed. The fundamental inflection point is imminent, giving 2024 40 times PE, a target price of 9.20 yuan, and maintaining a “buy” rating.
Risk warning: Risks such as policy promotion falling short of expectations, insufficient momentum for hospital endogenous reforms, and increased competition in the industry.