Plans to continue to acquire assisted reproductive hospitals, the national layout strategy continues to deepen the company plans to use its own capital of 111.23 million yuan to acquire the remaining 49% stake in Haikou Mary Hospital, no more than 112 million yuan to acquire no more than 70% stake in Jilin Licuang, and no more than 73.2 million yuan to acquire a total of no more than 30% stake in Haikou Boda. So far, the company has acquired and plans to acquire 6 assisted reproductive hospitals, forming a layout of "one south, two north", which will continue to form a national layout in the future. The company is the leader in the field of medical information subdivision, transforming the layout of the market for assisted reproductive services, and using information technology to enable assisted reproduction has great potential for development. Keeping the profit forecast unchanged, the estimated net profit from 2020 to 2022 is 53 million, 128 million and 191 million, respectively, and the corresponding EPS is 0.32, 0.77 and 1.16 yuan per share, respectively. The current stock price is 29.5 times that of 105.7, 44.2 and 29.5 times, respectively, maintaining the "buy" rating.

The layout of assisted reproduction extends to the south-central region, and the proposed acquisition of hospitals with license plates scarce locally will help the company to broaden the market of the medical service industry and extend the layout of the company's medical service industry chain to the central and southern regions. and consolidate the business layout in the northeast region, give better play to industrial synergy, enhance the company's sustainable development ability, and help to improve the company's competitiveness and profitability. Jilin Licuang, which is proposed to be acquired, holds a 100% stake in Jilin Beihua affiliated Reproductive Medicine Center Co., Ltd. Haikou Boda, which is proposed to acquire, holds 90% equity in Yanbian Yanyan Medical Center and 100% in Zhumadian Auxiliary Reproductive Medicine Center Co., Ltd. these three hospitals are the only local reproductive centers with assisted reproductive medical qualifications (Jilin City, Yanbian Korean Autonomous Prefecture, Zhumadian City). With scarcity.

The profitability of Haikou Mary Hospital is constantly increasing and is expected to continue to thicken the overall performance of the company. According to the 2020 audit report of Haikou Mary Hospital, the hospital's operating income in 2020 was 38.43 million yuan, an increase of 13.11% over the same period last year, and the net profit was 13.41 million yuan, an increase of 126.89% over the same period last year. The net interest rate increased from 17.4% in 2019 to 34.9% in 2020, and the profitability increased significantly. According to the data disclosed by the company and our projections, the 2020H1 net profit of Queen Mary Hospital is 5.1 million yuan, the net profit of 2020Q3 is about 4 million yuan, and the net profit of 2020Q4 is about 4.31 million yuan, showing a quarterly upward trend. As the company holds a 51% stake in Queen Mary Hospital by the end of 2020, the company is expected to increase its profit by 6.84 million yuan in 2020.

Risk hint: the integration of assisted reproductive hospitals is not as expected, and the application of Internet medical technology is not as expected.