Core ideas:
The company announces 20-year results. The 20-year income reached 2.751 billion yuan compared with the same period last year, mainly due to the acquisition of Jinan heavy truck Hospital and Huai Mining Hospital and Runeng Department Hospital; affected by the epidemic, the net profit of returning to the mother decreased by 20% year-on-year to 310 million yuan. In 2020, the total income of medical business of member hospitals fell 3.3% to 6.644 billion yuan compared with the same period last year. And list hospitals: medical business income increased by 127.9% compared with the same period last year; non-merged table hospitals: medical business income decreased by 32.6% over the same period last year:
Medical business revenue fell 0.5% year-on-year, the least affected by the epidemic among all hospitals.
Due to the impact of the epidemic, the profit contribution of hospitals in 2020 decreased by about 23.2% to 549 million yuan compared with the same period last year, with a profit contribution rate of 8.3%, a decrease of 2.1ppt compared with the same period last year. And table hospitals: profit contribution rate decreased 9.2pct compared with last year, mainly due to the impact of epidemic prevention and control requirements of Jiangong Hospital; non-amalgamation hospitals: profit contribution decreased 1.2ppt, mainly due to brain hospitals affected by epidemic prevention and control requirements; IOT/OT Hospital: profit contribution rate decreased 2.5pct, mainly due to the decline in revenue share of the restructuring of Beijing Coal Hospital.
Maintain a "buy" rating. The performance in 2020 was greatly affected by the epidemic. The overall hospital medical business income began to recover significantly in May 2020, and the June income basically returned to the level of the same period in 19 years, and is expected to return to normal growth in 2021. The income of listed companies will grow rapidly due to the consolidation of some hospitals in 2020, and the new Huaiyin Hospital will be added in 2021. It is estimated that the annual income of 21-22 will be 3.28 billion yuan (year-on-year + 19.3%) and 3.582 billion yuan (year-on-year + 9.2%), respectively. The estimated net profit is 468 million yuan (+ 51.0%) and 538 million yuan (+ 14.9%) respectively. The latest stock price is 14.5 times and 12.7 times for the 22-year PE, respectively. China Resources Medical has rich experience in hospital management, through continuous mergers and acquisitions to improve the operational efficiency of existing hospitals with two-wheel-driven growth. China Resources Medical will be given 20 times PE in 2021, corresponding to a reasonable value of HK $8.66 per share.
Risk hint. The epidemic has an adverse impact on offline hospitals; the expansion process is not as expected; the rapid development of Internet medical care has an impact on physical hospitals.