Performance increased steadily in the first half of 2024. The share of individual inspections and customer unit prices continued to increase. In the first half of 2024, the company achieved revenue of 4.205 billion yuan (-5.53% year over year; the following is a year-on-year scale), net profit to mother of 0.216 billion yuan (-4228.59%), net profit after deducting non-attributable net profit of 0.225 billion yuan (-5340.20%), gross profit margin of 35.65% (-1.5pct), net profit margin -4.97% (-6.22pct). In 2024, the company covered more than 30 provinces (autonomous regions and municipalities directly under the Central Government), including 310 holding branches, which ranked first in the industry in terms of covering cities, branches, and total number of medical examinations per year. We are optimistic about the long-term development of the company and maintain the company's profit forecast. We expect the company's net profit to be 0.765/0.733/1.115 billion yuan in 2024-2026, and the current stock price corresponding to PE is 17.8/18.5/12.2 times, maintaining a “buy” rating.

The share of the company's individual inspection revenue and customer unit price continued to increase in the first half of 2024. The company's medical examination service achieved revenue of 4.015 billion yuan (-7.51%) in the first half of 2024, with a gross margin of 34.52% (-2.69pct). In the first half of 2024, in the public health examination market, the two major brands “American Health” and “Ci Ming Medical Examination” were the core coverage of the market. The middle and high-end group health examinations, comprehensive medical service markets, and high-end personal health examinations provided a high level of quality services through “Ciming Oya” and “Meizhao Health” respectively. The total number of visitors received by the company was 9.88 million (including participating branches), of which the total number of visitors received by the holding branch was 6.15 million.

Group customers and individual customers accounted for 67% and 33% of revenue, respectively. In the first half of 2024, the company's physical examination customer unit price was 653 yuan, and the customer unit price continued to rise steadily.

The second half of 2024 is expected to usher in the peak physical examination season

In the first half of 2024, the company's sales expense ratio, management expense rate, R&D expense ratio, and financial expense ratio were 25.59%, 9.91%, and 3.63%, respectively, +1.65pct, +1.42pct, +0.01pct, +0.49pct. 2024Q2 company sales expenses rate, management expense rate, R&D expense rate, and financial expense ratio were 23.43%, 8.62%, 0.51%, 3.25%, compared with +1.53pct, +0.52pct, and -0.09pct. 0.22pct The company's medical examination orders were stable and good in the first half of the year, and businesses affected by the pace of medical examinations were gradually released in the third and fourth quarters of the second half of the year.

Risk warning: medical quality risk, goodwill impairment risk, external environmental impact, etc.