Rimag leads in the third-party medical imaging services market in China. According to Frost & Sullivan (F&S), the Company was the largest medical group specialized in medical imaging in China in 2023 in terms of medical imaging centers, equipment units, registrations by practicing radiologists who registered the Company as their primary workplace, average daily screening volume, and patient fees.

Significant unmet demand for quality medical imaging services in China. With a large population, China has a rapidly expanding market for medical imaging services. According to F&S, China's medical imaging service market is expected to grow at a CAGR of 13.6% from RMB270.9bn in 2023 to RMB661.5bn in 2030E. However, the uneven distribution of medical imaging services has resulted in heavy patient flow pressure at large public hospitals, and insufficient imaging capabilities in the primary healthcare system. Third- party medical centers can alleviate long waiting time and address the unmet demand for quality medical imaging services. Nevertheless, the third-party medical centers in China are still at an early stage, with only 163 effective licenses for third-party medical imaging centers as of 6 May 2024, indicating strong growth potential. China's third-party medical imaging center market is expected to reach RMB18.6bn in 2030E, with a CAGR of 30.7% from 2023 to 2030E, according to F&S. Rimag currently owns 31 licenses, placing it in a leading position.

Comprehensive medical imaging platform providing end-to-end imaging services. Rimag offers a full suite of medical imaging services and solutions to patients and medical institutions. It is also the only service provider that encompasses the entire development process of medical imaging centers, according to F&S. Rimag provides imaging center services through four types of imaging centers, including its own flagship imaging centers and those established in collaboration with hospitals such as regional collaborative, specialized medical consortium and operational management imaging centers. Through these imaging centers, Rimag integrated imaging resources and enabled lower-level hospitals to acquire professional imaging capabilities at a lower cost. This business model aligns well with the needs of hierarchical diagnosis and treatment. Rimag provides imaging solution services and the Rimag Cloud platform to medical institutions to improve their operation efficiency. With the expansion of medical imaging center network and increasing number of imaging solutions services projects, Rimag's revenue increased at a CAGR of 25.3% from RMB592.0mn in 2021 to RMB928.9mn in 2023. In terms of revenue generated from imaging center services, Rimag ranked second among all third-party medical imaging center operators in China in 2023.

Initiate at BUY with TP of HK$21.41. We expect Rimag's revenue to grow at a CAGR of 23.3% from 2023 to 2026E. We derived our target price of HK$21.41 based on a 9-year DCF model (WACC: 10.6%, terminal growth rate: 2.5%).