Incident: The company is a model for state-owned enterprises to practice medicine. The company recently released its 2023 annual report. The overall performance was steady. In 2023, the company achieved operating income of 10.108 billion yuan (+27.9%) and adjusted net profit of 644 million yuan (+57.0%). The increase in both revenue and profit was mainly due to the expansion of business volume and the increase in performance brought about by the merger of Liaojian and Jiangnengbiao.
Core competencies in discipline construction and operation management have been improved, and high-quality development has promoted the continuous growth of core business.
Through the improvement of operating efficiency, the company carried out talent training and discipline innovation. Its hospitals all increased in terms of business volume, revenue, and operating profit compared to the same period last year. The number of routine outpatient visits and hospitalizations in business-side hospitals was about 10.14 million (+10.0%) and 550,000 cases (+10.2%), respectively. On the revenue side, the company's hospital group's operating business revenue in 2023 was 10.108 billion yuan (+27.9%), of which comprehensive medical service revenue was 9.406 billion yuan (+33.4%). Thanks to the significant results of cost restructuring, the gross profit of the company's diagnosis and treatment business increased 45.9% year-on-year to 1,906 billion yuan. The company leverages its technical advantages and discipline leadership to enhance operation management and business capabilities, and is expected to achieve reasonable volume growth and continuous improvement in quality in the coming years.
The combined contribution of business has increased, internal and external integration has achieved remarkable results, and the hospital network layout continues to expand, becoming a model for central enterprises to operate medicine. In 2023, China Resources Healthcare will be deployed in 10 provinces, managing and operating a total of 134 medical institutions across the country; 13 are tertiary hospitals and 25 are level-II hospitals. In 2023, the company's own hospital had 18,617 beds, and the bed utilization rate reached 83.7%. China Resources Medical's overall revenue growth mainly comes from Liaojian (31 medical institutions) and Jiangneng member medical institutions (6), including the five top three hospitals, with comprehensive operating income of 4,096 billion yuan and comprehensive net profit of 383 million yuan. The revenue of Liaojian and Jiang Neng was traced back to June 2, 2022; after excluding the impact of mergers and one-time impairment of Huaiyin Hospital, the net profit of existing hospitals was 484 million yuan, an increase of 47.4% over the previous year, mainly due to further improvements in operating management efficiency. In the future, China Resources Medical will continue to make full use of the advantages of state-owned medical groups, promote the overall development of regional medical cooperation, and establish a medical business operation model unique to China Resources. Net profit is expected to grow rapidly with the network layout.
Profit forecast: Considering that the company is a model for central enterprises to practice medicine, a leading medical service company, the company's group management continues to improve and upgrade. After 23 years, a large amount of goodwill impairment has been calculated, and operating profit is still steady.
It is estimated that in 2024-2026, the company's revenue will be 107.56/113.71/11.80 billion yuan, net profit to mother will be 6.96/75/ 794 million yuan, and EPS will be 0.54/0.58/0.61 yuan respectively; the corresponding PE will be 7.28/6.74/6.39 times, respectively, raised to a “buy” rating.
Profit forecast:
Risk warning: hospital operation and management risk, health insurance policy risk, hospital goodwill impairment risk.