Adjusted net profit in the first half of 2002 increased 51% year-on-year to 252 million yuan (compared with our previous forecast of 233 million yuan), mainly driven by COVID-19 testing service.
We believe that the total number of diagnostic centers built by the company is expected to reach 450-500 by the end of the year (about 350 by the end of June 22).
We raised our target price to HK $21.0 on the basis of an increase in our profit forecast for 22am 23.
Be optimistic about the rapid growth of the number of diagnostic centers co-built by the company, and maintain the increased rating COVID-19 testing business led to strong revenue growth in the first half of 22 years.
Total income in the first half of 22 rose 82 per cent year-on-year to 1.379 billion yuan, mainly driven by COVID-19-related infectious disease testing. We estimate that COVID-19 's related income in the first half of 22 will reach about 800 million yuan, corresponding to a year-on-year increase of 100%. Thanks to the continued increase in the number of co-built diagnostic centers (an increase of 75 to a total of 350 centers), non-COVID-19 income has also achieved rapid growth (an increase of about + 40% Mel 45% compared with the same period last year). Gross profit margin, which fell about 4 percentage points year-on-year to 47 per cent in the first half of 22, was under pressure from COVID-19 's continued price cuts. The testing price of COVID-19 in Guangdong Province has dropped by 90% from 2020 to 15 yuan per person for single pipe and 5 yuan per person for mixed mining. The rate of sales management expenses (including one-time listing-related fees) remained stable at about 25% in the first half of 22, indicating that the company has the potential to achieve better operational efficiency in the future. As a result, the company's homing net profit rose 48% from a year earlier, and the company announced an interim dividend of HK $0.088 per share (about 20% dividend payout ratio).
The number of co-built diagnostic centers is growing rapidly.
Despite the outbreak in the second quarter of 22, the company built 75 new diagnostic centers in the first half of 22 (compared with 76 in 21). As of 22 years, the company is in the process of cooperative negotiations with about 90 hospitals. We believe that the company is expected to add more than 100 new centers in the second half of 22, and the number of diagnostic centers is expected to reach about 450-500 by the end of 22. Thanks to the rapid growth of testing demand in primary health care institutions and the optimization of the company's business layout, we predict that the company's co-construction of diagnostic testing service revenue will reach a compound annual growth rate of 62% in 2021-23.
Maintain the overweight rating and raise the target price based on the price-to-earnings ratio to HK $21.0. We have raised our adjusted net profit forecast for fiscal year 22 by 8% and 10% respectively to reflect higher-than-expected revenue growth in the first half of 22. As a result, we have raised our target price based on the price-to-earnings ratio from HK $19.1 to HK $21.0. We give the company 15 times 2023 earnings, a 10% discount to the industry's average of 17 times 2023 earnings, to reflect its faster profit growth and smaller revenue scale than its peers. Investment risk: contract renewal and regulatory risk.