Items:
On 2023-10-25, the company released its three quarterly reports. 2023Q1-Q3 achieved operating income of 16.047 billion yuan (+ 23.0%), net profit of 3.181 billion yuan (+ 35.0%), and non-return net profit of 3.105 billion yuan (+ 24.0%). In the third quarter, the company achieved operating income of 5.795 billion yuan (+ 17.2%), net profit of 1.469 billion yuan (+ 37.8%), and non-return net profit of 1.346 billion yuan (+ 20.1%). The net profit of returning to the mother in the third quarter exceeded expectations.
Comments:
Profitability remains high. The gross profit of 23Q3 is 56.3% (+ 0.1pct), the net profit of 23Q3 is 1.585 billion (+ 38.4%), and the net profit is 27.4% (+ 4.2pct). This is mainly due to the rapid expansion of the company's operating scale, the enhancement of brand influence, the steady growth of hospital income, and the overall slight decrease in the rate of management expenses, sales expenses and R & D expenses. 23Q3's management expense rate, sales expense rate and R & D expense rate are 13.1% (- 1.3pct), 9.6% (+ 0.1pct) and 1.7% (- 0.1pct) respectively. Good cost control further ensures the company's high profitability.
The hierarchical chain layout has been continuously deepened, and the acquisition has continued. On 2023-9-20, the company issued an announcement to acquire part of the shares of 19 medical institutions, including Hainan Aier. The 19 institutions opened relatively late and are still in the early stages of cultivation. More than half of the hospitals lost money in 22 years, but in 23 years, most hospitals quickly climbed the slope and successfully turned losses into profits, with an average net interest rate of 7.47%. The acquisition of hospitals throughout the country, including provincial capital cities and county-level cities, will help the company to deepen the hierarchical chain network, and will further enhance the certainty of the company's long-term performance growth.
Two share buybacks are used for equity incentives or employee stock ownership plans, demonstrating the company's long-term confidence. The company began to implement the share buyback program in June this year, and the cumulative repurchase amount has exceeded 366 million yuan. On October 25, 2023, the company issued an announcement on the plan to buy back the company's shares again, intending to buy back the company's shares again with its own funds of not less than 200 million yuan and not more than 300 million yuan, with a repurchase price ceiling of 26.98 yuan per share, fully reflecting the company's long-term development confidence.
Investment advice: according to the company's three-quarter report and the latest operating results, we expect the company's net profit from 2023 to 2025 to be 35.36,45.95 and 5.907 billion yuan (the previous forecast for 23-25 is 34.39,44.82 and 5.727 billion yuan, respectively), with year-on-year growth rates of 40.1%, 30.0% and 28.6%, respectively. With reference to the closing price on October 25, 2023, the corresponding PE of the company in 23-25 is 44, 34 and 26 times, respectively. According to the company's historical valuation and advantageous leading position in the industry, and with reference to comparable companies, we give the company a 24-year 50-fold target PE, corresponding to a 23-year target price of 24.63 yuan. Maintain the recommended rating.
Risk tips: the progress of self-construction or merger and acquisition of new stores is not as expected, market competition intensifies, and so on.