Brief performance review

On August 27, 2024, the company disclosed its 2024 interim results: 24H1 achieved revenue of 0.243 billion yuan, a year-on-year increase of 40.3%; realized net profit to mother of 0.147 billion yuan, an increase of 48.6% year on year; adjusted net profit to mother before excluding interest income was 0.052 billion yuan, an increase of 40.1% year on year.

Management analysis

The number of users and activity of the Medical Connect platform continues to increase. The number of registered users is nearly 7 million, of which the number of medical practitioners exceeds 4 million, covering 88% of the nation's medical practitioners; the monthly activity of the platform reached 2.5 million, an increase of 13.6% over the previous year. High physician coverage and user activity provide a solid foundation for the company to develop accurate marketing and intelligent patient management solutions.

By business, revenue from precision marketing and enterprise solutions was 0.226 billion yuan, an increase of 42.7% year over year. The online marketing method was recognized by domestic pharmaceutical companies. The number of the company's cooperative medical customers reached 158 during the reporting period, an increase of 27.4% over the previous year; the revenue contributed by a single product reached 0.672 million yuan, an increase of 7.5% over the previous year. The revenue of medical knowledge solutions was 8.422 million yuan, an increase of 4.5% over the previous year, mainly due to the increase in the number of users. The revenue of the intelligent patient management solution was 9.381 million yuan, up 27.7% year on year. The cumulative number of participating patients was 0.457 million, an increase of 46.9% year on year; the number of cooperating physicians reached 0.134 million, an increase of 50.6% year on year.

In terms of costs and expenses, the company's gross margin remained stable at 60.5%, slightly down 0.1 pct from the same period last year; business expansion showed an effect of operating scale. The company's sales expenses rate and management expenses ratio (excluding R&D expenses) decreased by 2.4 pct and 3.8 pct respectively in the first half of the year; the share of R&D expenses in revenue increased by 1.9 pct compared to the same period of the previous year, mainly due to investment in product development such as large models.

Profit Forecasts, Valuations, and Ratings

According to the 2024 mid-year report, we expect the company to achieve revenue of 0.541/0.712/0.928 billion yuan in 2024-2026, up 31.4%/31.5%/30.4% year on year; achieve net profit to mother of 2.67/2.84/0.304 billion yuan, up 10.3%/6.2%/7.0% year on year, corresponding to 19.3/18.2/17.0 times PE, maintaining the “buy” rating.

Risk warning

The business growth rate falls short of expectations, regulatory risks, increased risk of industry competition, risk of declining profitability due to business expansion, and risk of falling interest income.