Firmly promote the transformation of medical beauty, improve the incentive system to promote the layout of the industry. Since 2014, the company has actively sought and cultivated new profit growth points and set the transformation goal of "big style, big health, big finance". The company has always been committed to the exploration of growth industries and made substantial progress in many fields. In 2016, the company cut into the medical and beauty track and participated in investing in setting up an industrial fund with a scale of 5 billion yuan. through the industrial fund, it has acquired four medical hospitals, and then acquired Shanghai Tianda Hospital in 2017, forming the "Suya Medical and Beauty" brand system. The company has the advantage of first-mover layout in the medical and beauty industry. After years of sharpening, the company's management ability, brand influence and market competitiveness of the medical and beauty industry have been significantly improved. In the future, the company will set the medical and beauty industry as the main business, increase support in terms of capital investment and team incentives, with the intention of creating a new industrial growth pole.

Increase the intensity of M & A to build the whole industry chain of medical beauty. At present, Shanghai Tianda Hospital, which is within the scope of the company's consolidated statement, has the advantage resources to carry out "facial bone contour plastic technology" qualification, has the qualification of four-level surgery, and is the highest level in the industry. The other four medical hospitals are under the industrial fund (the company owns 45% of the shares). The five hospitals all have the qualification of medical beauty hospital, covering an area of 3-6, 000 square meters, involving plastic surgery, injection, skin and so on. Among them, the proportion of light medicine, surgery and dermatology is about 40%, 50%, 20%, 30% and 25%, 30%, respectively. At present, the company's "Suya Medical Beauty" brand system already has strong competitiveness and brand reputation in the regional market. at the same time, the company has set up a cross-functional M & A team, and it is expected to carry out mergers and acquisitions related to the industrial chain through industrial funds in the future. after the cultivation is mature, the injection of listed companies will significantly enhance the profitability of the company.

The real estate business is fed back, and there is plenty of cash flow to support the layout of the medical and beauty track. The company's current land reserve is about 2.38 million square meters, mostly located in the stronghold of Nanjing, accounting for nearly 70%. We estimate that the total value of the company's stock real estate projects is about 60 billion yuan. Due to the early acquisition of the company's projects, the profit margin of the real estate business is significantly higher than the industry average, and in recent years, benefiting from the relaxation of the talent introduction policy in Nanjing and the improvement of the strategic positioning of Jiangbei New area, the company's average sales price of real estate projects in Nanjing has increased significantly, and the gross profit margin of the company's real estate business in 2020 is as high as 62.9%. The company provides sufficient cash flow for the transformation through the elimination of stock real estate projects, and its net profit is more than 1 billion in recent years. It is expected that the company will still be able to provide stable profits and financial support in the real estate business in the future.

Investment advice and profit forecast: the company firmly believes that brand recognition and management ability have been significantly improved since the strategic transformation, and through share buybacks in the early stage, it is expected to be used as equity incentives for the backbone of the medical and beauty business in the future. in recent years, the company has built the whole medical industry chain through mergers and acquisitions, and the huge profits carried forward by the real estate main business can continue to provide ammunition for the transformation of medical beauty. Taking into account the persistence of the carry-over of real estate projects and the steady improvement in the revenue side of Healthcare, we expect the company to achieve a return net profit of 1.21 billion / 1.34 billion / 1.53 billion in 2021-2023, corresponding to a "buy" rating for the first time, corresponding to 17.7 PE 19.6 pounds.

Risk tips: the fluctuation of sales and cash return caused by the continuous tightening of the regional policy of the company's real estate project; the uncertainty that the M & An of the medical and beauty project falls short of expectations and injected into the listed company; the uncertainty of the expected regulation of the medical and beauty industry policy and so on.