Investment events: Recently, the company released its 2023 annual report and 2024 quarterly report: (1) 2023 operating income of 1,347 million yuan, up 5.01% year on year; net profit to mother was 168 million yuan, down 8.83% year on year. (2) Revenue for the first quarter of 2024 was 196 million yuan, up 4.18% year on year, and net profit to mother was 13 million yuan, down 19.80% year on year. (3) 2023 profit distribution plan: 1.2 yuan (tax included) for every 10 shares.
Healthcare continues to grow at a high rate, and the smart city business is being implemented at an accelerated pace. In 2023, the company's revenue achieved steady growth, reaching 1,347 billion yuan, up 5.01% year on year, including medical insurance business revenue of 707 million yuan, up 15.07% year on year, and smart city business revenue of 68 million yuan, up 62.81% year on year. In terms of health insurance business, the company has served health insurance information platforms in 23 provinces across the country, and provided services to more than 160,000 designated health insurance institutions in more than 100 cities across the country. In terms of medical care, the company's business has covered 20 provinces and more than 2,800 hospitals across the country. The medical insurance business accounts for more than 50% of revenue, has become the company's main source of revenue, and has maintained good growth. In 2024, the Q1 revenue scale reached 196 million yuan, a growth rate of 4.18%, and revenue continued to grow steadily.
Improved operating cash flow and optimization of operating conditions. In 2023, the company received 1,378 billion yuan in cash from sales of goods and services, compared with 1,144 billion yuan in the same period last year, an increase of 20.52% over the previous year. In terms of cash income, not only is the scale slightly higher than the revenue scale, but the growth rate is higher than the revenue growth rate. The company's net operating cash flow was 188 million yuan, up 401.38% year on year, and cash profit improved significantly. The data shows that the company's operating cash flow has improved and the operating conditions have been optimized.
Increase the data element business layout and open up new space for business growth. In terms of health insurance data elements, the company actively carries out local data zones, data governance, and data element services in accordance with the requirements of the Health Insurance Administration. In 2023, the company implemented the construction of multiple local and municipal data zones in Sichuan, and developed more than 20 algorithm models for the health insurance industry. Pilot business applications have already been implemented in Tianjin, Sichuan, Yunnan, Guizhou, Shanxi and Shaanxi provinces and cities. The company actively explores the data element business and increases the data element business layout. Data elements have a broad business space, opening up space for the company's business development.
Investment advice: We adjust the company's profit forecast by considering factors such as changes in downstream demand and the company's increased investment in the field of data elements. Before the adjustment, we expect the company's revenue for 2024/2025 to be 1,960/2,366 million yuan, respectively, and net profit of 310/380 million yuan, respectively. After the adjustment, we expect the company's revenue for 2024/2025/2026 to be 1,554/17.78/2,048 billion yuan, respectively, and net profit of 2.00/2.30/272 million yuan, respectively, and the corresponding PE is 38.4/33.4/28.3 times, respectively. Considering the company's business growth and the new development opportunities brought by the data element business, we gave the company a “buy” rating.
Risk warning: business development falls short of expectations, policy implementation is slow