Key points:

Medical services and pharmaceutical manufacturing are two-wheel drive, with steady revenue growth in 2023. The capital structure continues to improve. The company is an A-share listed company owned by Xinmileage Health Holdings and has now become a healthcare industry group covering medical services and pharmaceutical manufacturing. In 2023, the company achieved revenue of 3.59 billion yuan, an increase of 13.59% year over year. Among them, the medical service sector achieved revenue of 2.816 billion yuan, an increase of 6.32% year on year; the pharmaceutical sector achieved revenue of 0.774 billion yuan, up 51.22% year on year. Net profit of 38.9121 million yuan was achieved for the year, of which net profit attributable to shareholders of the parent company was 30.7766 million yuan. The balance ratio at the end of 2023 was 63.25%, down 5.54 percentage points from the beginning of the year, and the capital structure continued to improve.

Build a “1+N” innovative service based on level-3 general hospitals and specialist branches. In the field of medical services, the company has 3 level 3 and 7 general hospitals or specialist hospitals of level 2 and above, with a total of 11 hospitals with nearly 10,000 beds. Five regional medical centers have been set up in Jiangsu, Jiangxi and Sichuan in Liaoning, respectively, to create a “1+N” innovative service based on level 3 general hospitals. In 2023, the company's medical services achieved revenue of 2.816 billion yuan, an increase of 6.3% over the previous year. Bed occupancy increased from 88% in 2022 to 91% in 2023. The current situation of major hospitals under the listed company is as follows:

Lankao First Hospital (including Lankao First Hospital, Dongfang Hospital, and Luyang Hospital): Currently, it has 1,112 open beds, with a radiation population of about 1.2 million people. Lankao First Hospital has formed a county medical consortium with Lankao Oriental Hospital and Lankao Luyang Hospital, with a total of 1,560 beds. Lankao No. 1 Hospital has a market share of about 40-50% in the local medical market. Revenue of 0.53 billion yuan and profit of 41.2 million yuan was achieved in 2023.

Wafangdian No. 3 Hospital: It has 1001 beds and a medical radiation population of more than 1.2 million people. The hospital has 0.4 million outpatient visits per year, more than 0.04 million hospitalized patients per year, and more than 8,800 surgeries per year. Wafangdian No. 3 Hospital's share of the local market has reached about 30%, and it is one of the leading regional medical services in the region. 2023 revenue of 0.62 billion yuan, net profit of 79.16 million yuan.

Xuyi County Hospital of Traditional Chinese Medicine: 700 open beds, accounting for one-third of the county's health service volume. Xutai County Hospital of Traditional Chinese Medicine has been granted a cancer hospital license, and the 600-bed oncology specialist building has begun construction and is expected to be put into use in 2025. 20233 revenue 0.4 billion yuan, net profit 31.96 million yuan.

Second hospital in Chongzhou: 498 open beds. It has 6 medical institutions including Artificial Intelligence Rehabilitation Hospital, Hengde Diabetes Hospital, Shanxiang Geriatric Hospital, and Bone Health Hospital. Revenue of 0.35 billion yuan and net profit of 26.44 million yuan in 2023.

Siyang Hospital: The West Campus of Siyang Hospital has 800 open beds, and the East Campus covers an area of 102 acres with 800 beds (300 beds in the first phase). Siyang Hospital accounts for about 40-50% of the local medical market. 2023 revenue of 0.61 billion yuan, net profit of 74.55 million.

There is still room for expansion in the number of in-vitro hospital beds in listed companies, and it is expected that high-quality extracorporeal hospitals will continue to expand the number of beds in the future: the company will first complete the large-scale expansion of the listed companies' internal hospitals. Currently, Siyang Hospital's 800-bed East Campus was officially opened at the end of 2022; construction of a new oncology specialist building at Xuyi County Hospital of Traditional Chinese Medicine has begun, adding 600 additional beds, and is expected to open in 2026. Furthermore, within 5 years after the restructuring is completed, the New Mileage Health Plan will take the opportunity to inject its high-quality medical assets into the company through the company's own funding, merger and acquisition funds, merger and acquisition loans, and stock issuance, etc., to resolve the issue of competition between the controlling shareholders and the company's peers. Currently, the unlisted sector of Xinmileage Health controls nearly 30 hospitals above Class II and nearly 200 primary care institutions in nearly 20 provinces and cities across the country. The total number of beds exceeds 0.02 million, and the revenue in 2023 has reached 6 billion yuan.

The pharmaceutical industry uses “unique flavor” as the core to build oral care production lines in the pharmaceutical industry. The company has been committed to the R&D, production and sales of pharmaceuticals for more than 20 years. The “unique flavor” trademark is a well-known trademark in China, and has formed a number of leading products in the fields of proprietary Chinese medicine with the “unique flavor” series of drugs as the core. Specifically, there are 82 varieties such as unique flavor capsules, ginseng and astragalus schisandra tablets, maipin tablets, prostantone tablets, and gong mening capsules, etc., 46 varieties from the National Pharmacopeia, and 8 varieties produced exclusively in the country. The company makes full use of its unique drug function to invigorate blood stasis to create an oral care product line and enter the FMCG market. In 2023, the company's pharmaceutical manufacturing business achieved revenue of 0.774 billion yuan, an increase of 51.2% over the previous year.

Investment advice

As a healthcare company covering the two major businesses of medical services and pharmaceutical manufacturing, New Mileage will continue to optimize the governance structure, and is expected to take the opportunity to inject high-quality hospitals in vitro. The company's revenue for 2024-2026 is estimated to be 4.118/4.646/5.209 billion yuan, respectively, net profit to mother of 0.144/0.217/0.292 billion yuan, respectively, and 0.04/0.06/0.09 yuan for EPS, respectively. For the first time, coverage is given an “increase in wealth” rating.

Risk warning

Policy risk; medical service risk; market development risk.