Medical and aesthetic medical two-wheel drive, leading non-hospital medical services in Hong Kong. Yizi Health started with medical aesthetics, then quickly entered the medical race track through internal growth and external mergers and acquisitions, forming two-wheel drive. Currently, its main business covers the three fields of medicine, aesthetics, medicine, and veterinary medicine. The high driving force brought about by the synergy effect has prompted the company to develop rapidly, making it gradually the largest non-hospital medical service provider in Hong Kong, China. As of September 2022, the company has covered 42 brands, 35 medical specialties, a total of 293 full-time doctors, and a total of 12 million people served.

The medical and aesthetic industry is expected to show a good trend of rapid rise in volume and price. The developed medical standards in Hong Kong, China will contribute to the rapid development of its medical and aesthetic industry. Benefiting from factors such as rising per capita disposable income, increasing acceptance of medical and aesthetic consumption, and the rise of the face value economy, China's medical and aesthetic industry is expected to present broad prospects for a sharp rise in volume and price. Among them, the performance of non-surgical aesthetics is particularly impressive. Because of its characteristics of lower risk, less trauma, faster healing, and lower unit price compared to surgical medicine, it is popular among consumers and marketing attention from medical institutions. Furthermore, non-surgical medicine and aesthetics are less dependent on doctors than surgical medicine. In the face of the impact of the epidemic, it can show stronger performance performance, gradually showing a significantly faster growth rate than surgical aesthetics. In terms of the medical business, Hong Kong, China is in a leading position in the world in terms of medical standards, and is more mature than that of mainland China. At the same time, the status of private hospitals is comparable to that of public hospitals, and the development of private specialties is more impressive than that of private general clinics. With the support of advanced medical standards in Hong Kong, medical and aesthetic products are approved more quickly than in the mainland, and this has contributed to the continuous improvement in the acceptance and safety of medical and aesthetic consumption. In terms of pet medicine, the size of the pet market in China is growing rapidly, with pet medicine accounting for the second largest share of related fields. In the future, with the shift in consumption attitudes brought about by consumer consumption upgrades, pet raising will gradually shift from simple interests to emotional needs, roles, or becoming friends and family, and consumer sectors related to the pet service industry are expected to continue to grow rapidly.

Strong brand power boosts customer base expansion. Since its establishment in 2005, the company has been deeply involved in the industry for 18 years. As the largest non-hospital medical service provider in Hong Kong, it has become the largest medical aesthetic service provider in Hong Kong, China as early as 2014 (in terms of revenue). Strong brand accumulation ensures customer stickiness and rapid expansion of the customer base. On the part of old customers, with the exception of FY2021, which was hit by the epidemic and the revenue scale of old customers declined, the overall revenue of old customers showed a steady and rapid growth rate, and with the improvement of the epidemic situation in Hong Kong since FY2022, the revenue growth rate of old customers rebounded strongly to 35% of FY2023H1, surpassing the pre-pandemic (FY2020) level (26%); on the new customer side, as the nucleic acid testing business brought more new customers, the revenue growth rate for new customers in FY2021 reached 87%. FY2022-FY2023H1 also maintained a steady growth rate of around 20%. In the future, as the company actively expands stores in Hong Kong and the mainland, deepens its strategy in the Greater Bay Area, compounded by the improvement of the epidemic situation in the mainland, or brings about a recovery in the medical and aesthetic tourism boom in Hong Kong, the number of new customers is expected to expand rapidly and maintain a high level of performance. In terms of marketing, the company's public domain and private domain go hand in hand. The public domain mainly focuses on cooperation with external enterprises, and is complemented by e-commerce platform promotion. The private sector built a one-stop medical app and bought a data promotion company to enable product information to reach customers directly.

Endogeny and epitaxial are growing rapidly, boosting mainland business expansion. In terms of business layout, synergy has become a significant advantage for the company. The in-depth layout of the three sections of “Medical Aesthetic+Medical+Veterinary Medicine” helped the company build a one-stop diagnosis and treatment platform. In terms of business expansion, extended acquisitions are an important way for a company to expand its business footprint. Corporate mergers and acquisitions have clear ideas to ensure high-quality mergers and acquisitions, focus on synergies, sound mergers and acquisitions strategies, and carry out refined operation and group management of assets after mergers and acquisitions, enabling better development prospects and environments for mergers and acquisitions. In terms of store expansion, the company is actively expanding in the mainland at the same time as its business in the Hong Kong market is growing rapidly. In 2021, the company announced a strategic plan for the Greater Bay Area, which plans to open 30-50 stores in the Greater Bay Area within the next 3-5 years. In January 2021, the company's Shenzhen office headquarters began operation; in March 2022, the company was incorporated into the Shenzhen-Hong Kong Stock Exchange, increasing liquidity and continuing to provide driving force for the expansion of the mainland market.

Profit forecast and investment rating: The company is a leading one-stop medical service in Hong Kong. Its business areas cover medical treatment, medical aesthetics and pet medicine. Strong brand strength combined with deep industry accumulation is expected to help the company achieve continuous business growth in Hong Kong, and as the mainland epidemic situation continues to improve, the flow of medical and aesthetic tourists visiting Hong Kong is also expected to rise rapidly. On the mainland, the company is deeply involved in the Greater Bay Area expansion plan. It is expected that the epidemic situation in the mainland will gradually improve, and that the pace of expansion of stores in the mainland will continue to increase, fueled by a high increase in the mainland's medical and aesthetic industry and a continuous recovery in prosperity. We expect the company to achieve revenue of HK$37.92/47.40/HK$5.985 billion in FY2023-FY2025, respectively, +30%/+25%/+26% over the same period; we expect to achieve net profit of HK$100/370/555 million, or -49%/+270%/+50% year-on-year. Covered for the first time, giving it a “buy” rating. Covered for the first time, giving it a “buy” rating.

Risk warning: 1. Macroeconomic fluctuations; 2. The impact of the epidemic is repeated; 3. Industry policy fluctuations; 4. Increased industry competition; 5. Expanding stores falls short of expectations; 6. Domestic and foreign companies are not fully comparable, and relevant benchmarking data and data are for reference only.