Announcement: American Health Releases 2023 Annual Report and 2024 Quarterly Report

Strong performance growth in 2023 and a significant increase in profitability. 2023 operating income of 10.89 billion yuan (+26.4%), net profit to mother of 5.1 billion yuan (+190.5%), gross profit margin of 42.79% (+24.6pp).

In the first quarter of 2024, revenue was 1.801 billion yuan (-14.9%), and net profit attributable to mother was -287 million yuan.

The share of individual inspection customers has increased, driving up customer unit prices. Group inspection customers accounted for 80% of revenue, and individual inspection customers accounted for 20% of revenue, an increase of 2.8 pp over the previous year. The unit price for medical examiners continued to increase to 620.8 yuan, +11.2% over the same period last year.

Expense control is good, and net interest rates have increased significantly. The company's 2023 sales rate was 23.53% (-0.37pp), management rate 7.64% (-1.68pp), financial rate 3.35% (-0.60pp), and rate control was good, which led to a sharp increase in net interest rate. Net profit margin of 6.1% (+11.68pp) in 2023 Q4, net profit margin 9.76% (+13.50pp).

The revenue scale of the three major brands continues to expand. In 2023, “American Health” earned 8.43 billion yuan (+27.0%); “Ci Ming” and “Ci Ming Oya” earned 2.28 billion yuan (+29.7%); and “Mei Chao” earned 190 million yuan (+32.1%).

External mergers and acquisitions are integrated, driven by internal demand, and the scale of medical examination services continues to expand. The number of its medical examination centers is 596 (a decrease of 15 compared to the previous year), and it controls 306 medical examination centers (an increase of 16 over the previous year). The number of people served at its medical examination center (excluding nucleic acid) was 28.34 million (+13.0%), and the number of people served at the holding medical examination center (excluding nucleic acid) was 17.55 million (+13.7%).

Actively deploy “AI+” and “big data” to help reduce costs and increase the efficiency of medical examination services and operations. (1) Actively launch the industry's first health management AI robot, “Health Xiaomei”, to create the industry's first full-cycle AI accurate nutrition solution based on big health examination data; (2) AI+ refined operation to reduce costs and increase efficiency; (3) Continuously enhance the value of healthcare big data assets to support discipline development.

Quality-oriented, with remarkable results in discipline construction. The company is making every effort to upgrade medical quality, promote the construction of key disciplines, strengthen three-level quality control system management, and increase medical team training. Some of its branches were selected as national health examination and management professional quality control checkpoint agencies, and were awarded provincial and municipal clinical test results mutual recognition agencies, and obtained “mutual recognition vouchers” recognized by authorities for their excellent medical standards. In 23 years, medical personnel have published nearly 40 papers in national journals and academic conferences, and 40 have served as members of national professional associations.

Profit forecast and investment advice: We believe that the company, as a leader in the medical examination industry, continues to improve its operating quality and gradually increase customer unit prices. We look forward to starting a new stage of growth through endogenous outreach in the future. We expect the company's 2024-2026 revenue to be 124.95, 142.13, and 15.893 billion yuan respectively, up 14.7%, 13.7%, and 11.8% year-on-year respectively. Net profit to mother for 2024-2026 will be 831, 12.26, and 1,597 billion yuan, respectively, up 64.3%, 47.6%, and 30.2% year-on-year respectively, corresponding EPS of 0.21 yuan, 0.31 yuan and 0.41 yuan respectively. Referring to comparable companies, we gave the company a 2024 30-35X PE with a reasonable value range of 6.37-7.43 yuan per share, giving it a “superior to the market” rating.

Risk warning: medical dispute risk; goodwill impairment risk; shareholder pledge risk; chain operation management risk.