On August 27, 2024, Puri Ophthalmology released its 2024 semi-annual report. The company achieved revenue of 1.42 billion yuan (+3.08%), net profit due to mother 0.043 billion yuan (-81.56%), and net profit of 0.045 billion yuan (-69.50%); of these, 24Q2 achieved revenue of 0.744 billion yuan (+2.24%), net profit due to mother of 0.026 billion yuan (-63.59%), net profit of non-return to mother 0.026 billion yuan (-65.99%)

Comment:

The expansion of the new hospital continues, and profitability is under pressure. ① Sales expense ratio 16.77% (+1.00pct), ② management expense ratio 14.62% (+2.73pct), mainly due to new hospital expansion; ③ financial expense ratio 2.89% (+0.81pct). The above are all cost increases that have not been diluted by scale effects under the company's continuous expansion of new hospitals; ④ R&D expense ratio 0.30% (-0.05pct). 24H1 gross profit margin of 41.29% (-4.09pct), net profit margin of 3.05% (-13.99pct), net interest rate of 3.19% (-7.59pct) after deduction of non-return mother, is mainly the investment income confirmed by Dongguan Guangming Ophthalmology and Watch Co., Ltd. in 23Q1 (including non-recurring profit and loss).

Core business is under pressure in the short term. ① Refractive project 24H1 revenue 0.692 billion yuan (-2.50%), gross profit margin 48.96% (-4.05pct), refractive surgery price adjustments from an industry perspective continued to 24H1, and listed company performance was under short-term pressure; ② Cataract project 24H1 revenue 0.311 billion yuan (+13.22%), gross profit margin 42.31% (-1.06pct); ③ Comprehensive eye disease project 24H1 revenue 0.226 billion yuan (+14.87%), gross profit margin 12.17% (-7.60pct), the company's talent building continued to achieve performance growth; ④ The 24H1 optometry project had revenue of 0.184 billion yuan (-3.89%) and a gross profit margin of 45.09% (-0.58pct).

Hospitals continued to expand rapidly after listing, and the layout of multiple hospitals in one city accelerated. By the end of August 2024, the company had opened 31 ophthalmology hospitals (+4) and 4 ophthalmology clinics (+1). The additional hospitals were Guangzhou Puri, Wushi No. 2 Hospital, Shanghai Purui, Shenzhen Puri, and Heilongjiang Purui (with the exception of Heilongjiang Puri, which was approved as a medical institution license at the end of July 2024, the rest were approved within 24H1). The new outpatient department was Fuzhou Puri Clinic. The 2024 new hospital is mostly a one-city multi-hospital system plan, which is expected to provide a strong impetus for the company's growth in the next few years.

Profit forecast and investment advice: The company adheres to “national chainization+same city integration” and focuses on setting up boutique ophthalmology hospitals in central cities. The drainage volume of middle and high-end customers and high-end business development expectations are expected to achieve a “sharp rise in volume and price”. Considering the company's performance, we expect the company's revenue in 2024-2026 to be 2.836/3.275/3.746 billion yuan (original value 30.48/36.18/42.05), net profit to mother of 0.112/0.21/0.3 billion yuan (original value 1.58/2.60/3.53), and corresponding PE of 42X/23X/16X. We give the company a “buy” rating.

Risk warning: policy risk, risk of hospital expansion falling short of expectations, and increased risk of industry competition.