Incidents:

On October 30, 2024, the company released its report for the third quarter of 2024. The 24Q1-Q3 company achieved revenue of 7.141 billion yuan, -1.96% YoY; realized net profit of 0.025 billion yuan, or -88.96% YoY; realized net profit of 0.008 billion yuan without return to mother, or -96.43% YoY.

Comment:

In line with expectations, the growth rate in the single Q3 was impressive

24 Q3 achieved revenue of 2.935 billion yuan, +3.63% year over year; realized net profit of 0.24 billion yuan, +10.33% year over year; realized net profit deducted from non-mother 0.233 billion yuan, +4.05% year over year. In Q3, net revenue and profit both increased, and net profit increased 10% + year over year, with impressive results.

In terms of profitability, the 24Q1-Q3 company achieved a gross sales margin of 39.67%, 24H1+4.02pct; achieved a net sales margin of 1.13%, 24H1+6.10pct; achieved a sales expense ratio of 24.06%, 24H1-1.53pct; achieved a management expense ratio of 8.95%, 24H1-0.96pct; achieved a financial expense ratio of 3.27%, 24h1-0.36pct month-on-month, and the overall fee control effect was good.

Business strength continues to be consolidated, and new AI business is being introduced

As of September 30, 2024, the total number of company branches was 608, covering more than 30 provinces (autonomous regions and municipalities directly under the Central Government), including 312 holding branches, which ranked first in the industry in terms of covering cities, branches, and total number of annual medical examinations.

From a business perspective, the company adheres to an innovative development strategy, integrating and innovating AI+ medical examination projects. The first domestic health management robot “Health Xiaomei” released by the company in cooperation with Huawei and Runda Medical during the reporting period has carried out trial operation work in Hangzhou, Nanjing, Ningbo, Suzhou and other places. 26 branches have already started using key functions to support the company in improving its business competitiveness and increasing customer unit prices.

Investment advice: Maintaining a “buy” rating

The company is a leading group in the field of private medical examinations. Big medical examination data combined with AI technology continues to empower business innovation. The peak season for medical examinations is approaching in the second half of the year, and performance is expected to maintain healthy growth. We expect the company to achieve operating income of 11.47/12.866/14.26 billion yuan from 2024 to 2026, +5.3%/12.2%/10.8%; net profit to mother of 0.45/0.733/1.08 billion yuan, or -11.0%/+62.9%/47.2% YoY, maintaining a buying rating.

Risk warning

Risk of policy changes; risk of regional operation; risk of participation and transfer control falling short of expectations, etc.