Key points of investment
2023: Rapid growth in performance, slightly exceeding expectations. The company released the 2023 report and the 2024 quarterly report: in 2023, it achieved revenue of 4.618 billion yuan, an increase of 70.3% year on year; net profit attributable to mother and losses of 3.68 billion yuan and 499 million yuan respectively, narrowing by 68.7% and 55.6% year on year. Among them, the fourth quarter achieved revenue of 1,274 billion yuan, a year-on-year increase of 59.9%; net profit to mother and loss of 1.46 billion yuan and 149 million yuan respectively, narrowing by 58.2% and 55.4% year-on-year; high growth continued, slightly exceeding expectations.
2024Q1: Deductions have not continued to narrow, the lowest loss quarter since 2019. In 2024Q1, we achieved revenue of 1,173 billion yuan, up 10.8% year on year. The slowdown in growth is expected to be mainly affected by the high base for the same period last year; net profit loss to mother was 105 million yuan, an increase of 40.4% year on year. Excluding the impact of non-operating factors, the 2024Q1 deducted non-return loss of 90 million yuan, a year-on-year loss reduction of 13.1% and a month-on-month loss reduction of 39.9%; making it the quarter with the smallest deduction of non-loss since 2019.
High-tech hospital: It is expected to enter a full operating year. 1) High performance growth rate, excellent profit side. In 2023, Hi-Tech Hospital achieved revenue of 1.49 billion yuan (YoY +50.5%) and net profit of 70 million yuan (YoY +217.2%); performance growth was high, and the scale effect was outstanding. 2) The full year of 2024 is expected to enter a full operating year. In 2023, the number of outpatient emergencies in high-tech hospitals was 1.1511 million (YoY +32.7%), and the number of hospitalizations was 64,600 (YoY +56.0%); the highest number of daily outpatient emergencies was 4,952, and the highest number of hospitalized patients was 1,865; all indicators reached new highs. Based on the set number of beds set at 1,500, it is expected that the Gaoxin Hospital will enter a full operating year in 2024. 3) The discipline continues to be built, and performance can be expected to increase. In 2023, the Department of Gastroenterology and Radiology received the annual key clinical specialty construction project; various special services and diagnosis and treatment centers such as plastic surgery hospitals, ophthalmology hospitals, and digestive endoscopy were newly established. The diverse medical needs of patients were gradually met, and performance can be expected to increase.
Central Hospital: The scale of business continues to expand, and development is on the fast track. 1) Revenue grew rapidly, and losses were drastically reduced. In 2023, Central Hospital achieved revenue of 3,043 billion yuan, an increase of 87.9%; net profit loss was 261 million yuan, a year-on-year decrease of 66.1%.
2) The volume of diagnosis and treatment is rising at an accelerated pace. In 2023, the number of outpatient emergency cases at the central hospital was 1,237,600 (YoY +108.1%), and the number of hospitalizations was 121,200 (YoY +92.7%); the highest number of outpatient emergencies per day was 5,299, and the highest number of patients were hospitalized. The number of patients treated continued to grow rapidly. 3) Serious and consumer-like disciplines go hand in hand, and the scale of the business continues to expand. ① South Hospital: An endocrinology and metabolic disease hospital was established, and 17 new departments or units were opened, including five departments of cardiovascular medicine and a breast disease diagnosis and treatment center; several departments/hospitals were certified by authorities. ② North Hospital: 19 new departments have been established, including three and five departments of neurological rehabilitation, a rehabilitation spa department, and a psychiatric hospital. Orthopedic hospitals were approved as municipal key clinical specialties. ③ In 2023, the North and South Park of the Central Hospital introduced a total of 1,841 outstanding talents of various types, including 7 subject leaders, 267 master's degrees, 64 senior titles, and 153 mid-level professionals. Continue to introduce outstanding talents on a large scale to support business development.
Investment advice: The company is actively developing a comprehensive medical innovation business model of “serious medical+consumer medicine”. As the volume of diagnosis and treatment accelerates and the revenue structure is continuously optimized, the overall performance is expected to continue to grow rapidly. We maintain the 2024/2025 profit forecast and add the 2026 profit forecast. The company's net profit for 2024-2026 is estimated to be 1.54, 4.26, and 636 million yuan, respectively, and EPS of 0.07, 0.19, and 0.28 yuan, respectively. Maintain a “buy” rating.
Risk warning: Risk that the scale of diagnosis and treatment is growing less than expected, managing operational risks, and the risk of shortage of healthcare resources.