Introduction to this report:
In the short term, due to high base figures, the consumption environment, etc., revenue growth has slowed, and performance is in line with expectations. The company insists on implementing the 1+8+N development strategy domestically, steadily advancing the international layout, and further consolidating and strengthening its comprehensive advantages. Maintain an increase in holdings rating.
Key points of investment:
Maintain an increase in holdings rating. Considering the pace of recovery in consumer medicine, the 2024-2025 EPS forecast was lowered to 0.43/0.50 yuan (originally 0.49/0.62 yuan), and the 2026 EPS forecast was 0.59 yuan. Referring to comparable company valuations, the 2024 PE 37X was given, and the target price was lowered to 15.91 yuan to maintain the increase rating.
The performance was in line with expectations. In 2023, the company achieved revenue of 20.367 billion yuan (+26.43%), net profit of 3.359 billion yuan (+33.07%), net non-net profit of 3,514 billion yuan (+20.39%), net operating cash flow of 5.872 billion yuan (+30.76%), gross profit margin of 50.79% (+0.33pct), and net profit margin of 17.95% (+1.26pct). 2024Q1 achieved revenue of 5.196 billion yuan (+3.50%), net profit attributable to mother of 899 million yuan (+15.16%), after deducting non-net profit of 843 million yuan (+12.04%). The results were in line with expectations.
Cataracts and eye diseases need to be released immediately after the epidemic, and refractive pressure is applied for a short period of time. In 2023, the company achieved 15.1064 million outpatient visits (+34.26%) and 1.1837 million surgeries (+35.95%). Due to the release of demand for medical treatment of cataracts and eye diseases delayed by the external environment, cataract project revenue was 3.327 billion yuan (+55.24%); revenue from the anterior segment project was 1,791 billion yuan (+33.74%); revenue from post-eye projects was 1.386 billion yuan (+31.31%); consumer projects were under short-term pressure, with revenue of 7.431 billion yuan (+17.27%) from optometry services projects.
With the expansion of the global service network, the share of overseas revenue is expected to increase. By the end of 2023, there were 881 Aer brand hospitals, ophthalmology centers and clinics worldwide, including 750 in the mainland (439 listed companies and 311 M&A funds), in addition to 8 in Hong Kong, China, 1 in the US, 108 in Europe, and 14 in Southeast Asia, gradually forming a global medical service network. Hong Kong, China and overseas regions accounted for 11% of revenue in '23. As globalization progresses, the share of overseas business is expected to increase.
Risk warning: Consumer health recovery fell short of expectations, and hospital expansion fell short of expectations.