Key points of investment:
Incident: On May 31, the company announced the acquisition of part of the shares of 52 medical institutions. The transaction was paid with its own funds, and the total transaction amount was 1,344 billion yuan.
With the acquisition of another city, the hierarchical chain layout continues to deepen. The 52 medical institutions acquired this time had a total revenue of 954 million yuan in 2023, an increase of 27% over the previous year, with a total net profit of 16.31 million yuan and a loss of 64.27 million yuan in the same period last year. Among the medical institutions acquired in this batch, there were 23 profitable hospitals and 29 loss-making hospitals, with an overall net interest rate of 1.7% in 2023. With the exception of Chongqing Vision (16% net interest rate in 2023), Beijing Air (25%), Ling Yuan Aier (21%), and Fuzhou Rui Ming Aier Ophthalmology Clinic (17%), the net interest rates of the rest of the medical institutions still have a lot of room to improve and are in a period of rapid decline. Since initiating epitaxial mergers and acquisitions, Air has accumulated rich integration experience. Therefore, after the acquisition, the company will use its platform advantages to promote, integrate and share relevant medical service resources, enhance the efficiency of resource allocation between regions, give full play to synergy and scale effects, and continuously improve profitability. As the target hospital's performance climbs and profitability improves, the performance of listed companies will be further enhanced. In terms of regional distribution, the medical institutions acquired this time are spread all over the country, and most of them are located in prefecture-level cities or primary counties. By the end of 2023, there were 439 domestic medical institutions under Aier Ophthalmology. After the acquisition is completed, the number of medical institutions in the country will be 491. The pace of national network construction is progressing steadily, and the company's hierarchical diagnosis and treatment network will be further deepened.
Maintain an “Overweight” rating. We maintain our previous profit forecast. We expect to achieve operating income of 23.917 billion yuan, 28.763 billion yuan, and 34.243 billion yuan in 2024-2026, up 17.4%, 20.3%, and 19.1% year on year. Net profit to mother is estimated to be 4 billion yuan, 4.889 billion yuan, and 5.811 billion, respectively, up 20.2%, 20.8%, and 19.1% year on year. Corresponding price-earnings ratios are 28 times, 23 times, and 19 times. The company is the largest ophthalmology medical chain in the world. As the domestic and foreign diagnosis and treatment network continues to expand, the company's brand advantage and scale advantage will be further deepened, and its business scale and profitability will also be further expanded, so it maintains an “increase” rating.
Risk warning: risk of price reduction in collection, increased risk of competition, risk of medical malpractice.