Core ideas:
The epidemic situation has been effectively controlled throughout the country, and the company's business has grown steadily. The epidemic situation in some areas had little impact on the company's overall operation. in the first half of the year, despite the impact of the epidemic in Guangzhou and the transformation of Beijing Coal Hospital into a non-consolidated hospital, the medical business income of the company's member hospitals still increased by 14.5% compared with the same period last year. The company's return net profit increased by 8.8% compared with the same period last year. The second half of the year is expected to continue the growth trend of the first half of the year, coupled with the increment of Huaiyin Hospital, the profit growth rate is expected to be better than the first half of the year.
The court case of Yanhua Hospital has been settled, which has a positive impact on the company. According to the company's recent announcement, Yanhua Hospital IoT agreement dispute of the second instance upheld the original judgment, and was ruled as the final judgment. The main ruling includes: Yanhua Hospital unilaterally rescinded the agreement invalid, need to pay 14.4 million yuan in liquidated damages. If the other party does not bring up a retrial, the judgment shall be upheld. We believe that the settlement of the lawsuit in Yanhua Hospital has several positive effects on the company: (1) it can obtain 14.4 million yuan in liquidated damages and recover the loss of supply chain and management fees over the past 19 years (refer to the profit contribution of Yanhua Hospital in 18 years is about 107 million yuan); (2) it shows that the IOT model is not prohibited by law, and the validity of the agreement is supported by law. IOT model is a transitional model, at present, the company is more acquisitions for its own hospital, in addition to doing OT project exploration, output management capacity, charge management fees.
The dual-drive growth strategy of endogenesis plus M & A remains unchanged. China Resources Medical and China Resources Health Management team have achieved a high degree of integration, forming a team and two platforms, with the same assessment objectives, which is conducive to the follow-up asset injection. China Resources Health has about 15000 beds (excluding China Resources Medical). Recently, it has reached a cooperation with Guangzhou Industrial Control Health to jointly promote the Guangzhou Iron and Steel Xincheng Hospital project (1200 beds, third-class general hospital). In the future, we will continue to work with China Resources Health to promote the landing of high-quality projects of central enterprises, acquire high-quality for-profit general hospitals, and create characteristic specialties through internal derivatives and external mergers and acquisitions.
Profit forecast and investment rating. It is estimated that the net profit of homing in 21-12-23 is 449, 513, 580, 000. China Resources Medical has rich experience in hospital management, through continuous mergers and acquisitions to improve the operational efficiency of existing hospitals with two-wheel-driven growth. With reference to the valuation of comparable companies and taking into account the current illiquidity of Hong Kong stocks, it is given 18 times PE for 22 years, corresponding to a reasonable value of HK $8.55 per share. Maintain a "buy" rating.
Risk hint. The expansion process was not as expected, and the epidemic situation had an adverse impact on offline hospitals.