Effective corporate governance and steady improvement in performance

The company publishes its 2023 annual report and 2024 quarterly report. In 2022, the company completed the judicial restructuring process and established a strategic development direction centered on pharmaceutical+medical care. Since then, the company's various businesses have accelerated development, and profit improvements have been achieved rapidly through fine management. In 2023, the company achieved operating income of 3.59 billion yuan, an increase of 13.6% over the previous year; excluding the impact of equity incentive expenses, net profit not attributable to mother was 187 million yuan, an increase of 104% over the previous year. In the first quarter of 2024, the company achieved operating income of 863 million yuan, an increase of 9.85% over the previous year; net profit to mother was 024 million yuan, an increase of 12.19% over the previous year. In addition, the company's debt structure continues to be optimized. The company's balance ratio for 2021-2023 was 76.29%, 68.71%, and 63.25%, respectively, which decreased significantly.

The goal of endogenous growth is gradually being realized, and the layout of the big health industry is getting better

At present, Xinmileage Group has formed a “four in one” health industry pattern of medical treatment, medicine, health care, and insurance. A number of important breakthroughs were achieved in the opening year of the company's “Three Year High Quality Development” in 2023:

1. In terms of medical care, the company actively promotes the expansion of its own beds to meet the growing needs of local patients and increase competitiveness and share. In 2023, the company made significant progress in expanding several of its campuses. Among them, 1) Siyang Hospital: The new hospital area has opened, adding 800 beds; 2) Chongzhou Second Hospital: the new grade 3 hospital area is expected to be put into use by the end of 24, adding 800 additional beds; 3) Xuyi County Hospital of Traditional Chinese Medicine: Construction of the Oncology Specialist Building began in the second half of '23, and is expected to add 600 additional beds. 4) The renovation of Wafangdian Third Hospital has begun. It is expected to be put into use in 24, adding 600 new beds; in the next two years, four new hospitals will be built, and the company plans to add 2,500-3,000 of its own beds.

Furthermore, over the past 23 years, breakthroughs have continued to be made in hospital discipline construction. The Xuyi Hengshan Cancer Hospital complex project, a large-scale comprehensive tertiary hospital featuring cancer treatment and rehabilitation, began in October, and Wafangdian No. 3 Hospital has also obtained an oncology license. Currently, the company's hospitals have set up various specialist departments in oncology, geriatrics, nuclear medicine, etc., and their competitiveness continues to improve. As of the annual report, the number of provincial and municipal key disciplines in the company's hospitals has reached 31.

2. In the pharmaceutical sector, the company's exclusive specialty Tibetan medicine brand “Unique Taste” series has many national base medicines, national medical insurance, and national exclusive products, and traditional Chinese medicine brands have a deep accumulation of traditional Chinese medicine brands. In the second half of '23, the company completed the merger and acquisition of Forren Pharmaceuticals and added 46 Sinopharm approved batch numbers. The pharmaceutical sector is expected to grow rapidly in the future. The company's pharmaceutical sector achieved revenue of 774 million yuan in 2023, an increase of 51.2% over the previous year.

3. The medical insurance and health care business is progressing steadily. In October '23, a lung health management product jointly launched by Caring Life Insurance, an insurance company under Xinmileage Group, and Hebei Tangshan Hongci Hospital successfully launched, and collaboration with the medical business was officially launched.

Extracorporeal asset injection can be expected. Since asset restructuring, the company has relied on the Group's industrial advantages in the four pillars of medicine, pharmaceuticals, health care and insurance, and has steadfastly implemented the Group's strategic reform initiatives, with outstanding results. As of November 2023, the company's extracorporeal assets include nearly 30 hospitals of level II and above and nearly 200 primary medical institutions, with a total of more than 20,000 beds. Of these, 50% of the in-vitro hospitals have completed profitable restructuring. In the future, as the profitability restructuring of extracorporeal assets and the advancement of asset injections, the scale effect will expand further and increase profitability.

Profit forecasting

The company's revenue for 2024-2026 is 40.49, 46.07, and 5.261 billion yuan, respectively, EPS is 0.04, 0.07, and 0.11 yuan, respectively. The PE corresponding to the current stock price is 67.4, 35.2, and 23.1 times, respectively. Since Xinmileage Group took over the management of listed companies, profits have been significantly improved through refined management and forward-looking strategic layout. It is expected that in the future, with the gradual advancement of the company's strategy and the injection of external assets, the company's profit is expected to further increase. Maintain a “buy” investment rating.

Risk warning

The progress of extracorporeal asset injection fell short of expectations, and the progress of the hospital business fell short of expectations.