Matters:
On April 25, the company released its 2023 Annual Report and 2024 Quarterly Report. Revenue of $4.618 billion (+70.34%) in 2023, net profit loss of $368 million (loss of $1,177 million in 2022), net profit loss of $499 million after deducting non-return net profit loss of $499 million (2022 net loss of $1,123 million). In 2024, Q1 achieved revenue of 1,173 billion yuan (+10.75%), net profit loss of 105 million yuan, and net profit loss of 90 million yuan after deducting non-return to mother.
Commentary:
The revenue side of central hospitals continued to rise, and losses narrowed markedly throughout 2023. In 2023, Central Hospital achieved revenue of 3,043 billion yuan, a year-on-year increase of 87.94%, and a net loss of 261 million yuan. Compared with the loss of 769 million yuan in 2022, the loss was significantly narrower. In 2023, the medical quality and service quality of the Central Hospital continued to improve. At the same time, with the official opening of the North Hospital and the layout of specialty specialties becoming more and more perfect, various medical data grew significantly, and the scale of business continued to expand. In 2023, Xi'an International Medical Center Hospital (including the North Campus) provided 1,237,600 emergency services (+108.07%), 121,200 inpatient services (+92.69%), 60,800 physical examination services (+80.32%), the highest number of outpatient emergency services per day was 5,299, and the highest number of daily patients was 3,937. In 2023, the Central Hospital and Central Hospital North Campus introduced 622 and 1,219 talents respectively, and the company's discipline and talent development reached new heights.
High-tech hospitals continued to maintain a full load, and various business indicators reached record highs. In 2023, Xi'an Gaoxin Hospital achieved revenue of 1,485 billion yuan, a year-on-year increase of 50.53%, and net profit of 69.69 million yuan, an increase of 217.23% year-on-year. In 2023, Xi'an Gaoxin Hospital had 1.1511 million emergency services (+32.71%), 64,600 inpatient services (+56.04%), 65,600 physical examination services (+35.26%), the highest number of outpatient emergency services per day of 4,952, and a maximum of 1,865 patients per day. Various medical data increased significantly, and the business scale continued to expand. At the same time, in 2023, the company continued to promote discipline and talent building, introducing 160 outstanding talents, laying a solid foundation for the company's future development; medical education and research collaborated to help the clinic, successfully launched 50 new projects and technologies during the year, and registered 25 restricted technologies at the national and provincial levels to promote the transformation of achievements.
Investment advice: According to the company's quarterly report and the latest situation, we adjusted the company's revenue for 2024-2026 to $58.16, 70.92 and 8.480 billion yuan (59.38 billion yuan and 7.219 billion yuan, respectively), up 25.9%, 21.9%, and 19.6% year-on-year, and net profit to mother of 1.55, 3.53, and 602 million yuan, respectively (pre-forecast values for 24 and 25, respectively). According to DCF model estimates, we expect the reasonable valuation of the company to be 18.9 billion yuan in 2024, corresponding to the target price of 8.3 yuan. Maintain a “Recommended” rating.
Risk warning: 1. Price adjustments for medical services exceeded expectations; 2. The increase in bed usage fell short of expectations; 3. Risk of changes in health insurance policies, etc.