Performance summary: The company released the 2024 quarterly report and the 2023 annual report. The first quarter of 2024 achieved revenue of 1.17 billion yuan (+10.8%), net profit attributable to mother of 110 million yuan (-40.4%), and approximately -90 million yuan (+13.1%) after deduction. In 2023, the company achieved revenue of 4.62 billion yuan (+70.3%), net profit to mother of 370 million yuan (+68.7%), and approximately 500 million yuan (+55.6%) after deduction.

The results were in line with expectations, and the number of outpatients continued to grow. The company's revenue growth rate in 2023 was 70.3%, and net profit growth rate was 68.7%; 24Q1 revenue growth rate was 10.8%, and net profit growth rate was -40.4%. In '23, the North Campus of Central Hospital opened, and the overall scale of the company's medical service business was effectively expanded. Central Hospital (including the North Hospital) had 1,238 million outpatient emergency visits (+108.1%), 121,000 hospitalizations (+92.7%), and 61,000 medical examinations (+80.3%). High-tech hospitals had 1.151 million outpatient emergency visits (+32.7%), 65,000 hospitalizations (+56%), and 66,000 medical examinations (+35.3%).

Sales expenses increased in 2023, and the 24Q1 expense ratio continued to be optimized. The increase in sales expenses in '23 was due to an increase in advertising expenses, and sales investment declined in 24Q1. The decline in R&D expenses was clearly due to the influence of the subsidiary Youjun Medical's optimization of the size of R&D personnel. In terms of cost ratio, the company's 2024Q1 sales expense ratio (-0.01pp), management expense ratio (-1.18pp), and R&D expense ratio (-0.15pp). The company's cost control has been optimized.

Discipline construction capabilities continue to improve, and the proton project has made new progress. In 2023, the company established new plastic surgery hospitals, ophthalmology hospitals, and service and diagnosis centers for digestive endoscopy, cardiopulmonary resuscitation, and VIP health management. The North Campus of the Central Hospital established 19 new departments, including the Department of Minimally Invasive Spine, the Department of Neurological Rehabilitation, and PICU. Meet the diverse needs of patients, and further enhance diagnosis and treatment capabilities. The proton therapy center was completely capped, and the cyclotron, the core component of the treatment system, was successfully released. Frontier medical technology and treatment programs such as yttrium 90 and stem cells continue to be implemented.

Profit forecast and investment advice: The estimated EPS for 2024-2026 is 0.04 yuan, 0.16 yuan, and 0.26 yuan, respectively. The utilization rate of beds in the company's central hospital continues to rise, and the scale effect will gradually become prominent. It is expected that in 2024, the loss will be reversed and the “buy” rating will be maintained.

Risk warning: policy risk; risk of product development falling short of expectations; risk of medical malpractice.