Investment events: Recently, the company released its 2023 annual report and 2024 quarterly report: (1) 2023 revenue of 1,616 billion yuan, growth rate of 5.81%, net profit to mother of 37 million yuan, a year-on-year decrease of 13.93%. (2) Q1 revenue in 2024 was 375 million yuan, a growth rate of 7.76%, net profit to mother of 12 million yuan, a growth rate of 19.03%. Net profit after deducting non-return to mother was 210 million yuan, a growth rate of 51.52%. (3) Profit distribution plan: 0.1 yuan (tax included) for every 10 shares.
The medical IT business is growing steadily, and orders of the 10 million level are in good condition. In 2023, the company's medical IT business revenue reached 1,479 million yuan, up 8.66% year on year, and non-medical industry business reached 136 million yuan, down 17.6% year on year. The healthcare IT business accounted for 91.56% of revenue, an increase of 2.4 percentage points over the previous year. Also, during the reporting period, the company's 10 million level projects yielded a lot, and received 29 10 million software orders for smart hospitals and public health, with a total amount of nearly 500 million yuan. In addition, the company's new and old customers accounted for 37% and 63% respectively during the reporting period, and the customer structure was further optimized. In 2024, the company's business was further optimized. The revenue growth rate reached 7.76%, the net profit growth rate was 19.03%, and the net profit growth rate after deducting non-return was as high as 51.52%. Revenue maintained good growth, and the profit side improved significantly.
Accelerate the launch of new business and new products to promote rapid business growth. In 2023, the company's new business products such as Hi-HIS, Internet of Things, and smart health insurance were successfully implemented. In terms of Hi-HIS, the products have been launched by more than 40 hospital customers across the country, and 22 new Hi-HIS related orders were signed in 2023. In terms of Internet medical care, the total number of connected institutions to the SaaS Internet hospital platform is nearly 1,500, with more than 40,000 registered doctors; the number of cloud nursing service business partners is 196, and the number of registered nurses on the platform is more than 5,000; and the “Health Wenzhou” app, applet, and website portal has been officially launched and continues to operate smoothly. In terms of the medical Internet of Things, the comprehensive hospital operation and maintenance management platform launched by the company has been launched at a hospital in Zhejiang and its affiliated children's hospital. The platform covers five major modules and 81 sub-modules. In terms of smart health insurance, local products have covered 13 provinces (cities), autonomous prefectures and 11 prefecture-level cities; smart health insurance revenue has grown by 204.58%.
Join hands with Philips and join forces to open up new areas of business development. Feiyuekang CareSync, a CTAsy1.0 electronic medical record product jointly developed by the company and Philips, has been officially released. Furthermore, in terms of “medical technology support,” product integration of “self-developed products+Philips cooperative products” is being promoted one after another. High-quality products such as Philips Vue PACS, SMART ICU, and TMV ECG systems are integrated with the company's self-developed products to meet the differentiated needs of different customers. At present, Philips has started pre-sales work for the Feiyuekang CareSync project in many hospitals, and the project is about to be implemented at an accelerated pace.
Investment advice: Considering factors such as changes in the macro situation and the company's increased investment in R&D, we adjust the company's profit forecast. Before the adjustment, we expect the company's revenue for 2024/2025 to be RMB 2,416.03 billion, and net profit of RMB 482/623 million, respectively. After adjustment, we expect the company's revenue for 2024/2025/2026 to be 1,944/23.14/2,761 billion yuan, respectively, and net profit of 249/3.40/470 million yuan, respectively, and corresponding PE 26.4/19.3/14.0 times, respectively. Considering the company's high business growth and low valuation level, we give the company a “buy” rating.
Risk warning: business development falls short of expectations, policy implementation is slow