Report summary
This week, we discuss the competitive advantages and investment value of haijiya medical.
1. Haijiya medical: China’s leading cancer medical service, with comprehensive expansion of endogenous extension. Haijiya medical is currently China’s largest private cancer medical service group. The company started with radiotherapy business and gradually established a network of hospitals and radiotherapy centers with oncology department as the core. At present, the company has 10 private for-profit hospitals, manages 2 private non-profit hospitals and provides radiotherapy center services to 18 hospital partners, The business layout covers 18 provinces and cities. The company’s performance grew steadily. From 2017 to 2021, the company’s revenue increased from 597 million yuan to 2.315 billion yuan, with a compound growth rate of 40.33%, the net profit attributable to the parent increased from – 46 million yuan to 441 million yuan, and the adjusted net profit attributable to the parent increased from 49 million yuan to 451 million yuan, with a compound growth rate of 74.18%.
2. The internal operation management system is efficient, the external expansion mode is mature, and the business is highly reproducible
(1) the internal management system of haijiya medical is mature and efficient. The double Dean system and highly modular management system effectively ensure the operation efficiency of the company’s new hospital. The preparation cycle and profit cycle of the new hospital are significantly lower than the industry average. In addition, there is a set of effective measures to ensure the integration of the company after the acquisition.
(2) radiotherapy business has the characteristics of high gross profit, high standardization and high patient stickiness. It can provide stable and high-quality cash flow for newly opened hospitals. It is an ideal pilot business for hospital expansion. The company makes full use of the cost and technical advantages of its own radiotherapy equipment configuration, arranges a large number of third-party radiotherapy centers, effectively accumulates local patient, doctor and government relationship resources, and lays a good foundation for subsequent self built hospitals.
3. The extension continues to expand the medical network service capacity, and the operation of core hospitals is stable
(1) endogenous growth: the phase II projects of Shanxian haijiya, Chongqing haijiya and Chengwu haijiya are expected to be put into use successively from 2022 to 2023, the newly-built hospital Liaocheng haijiya has been put into use, and Dezhou haijiya, Wuxi haijiya, Longyan haijiya, Changshu haijiya and Anyang haijiya are expected to be opened successively from 2022 to 2024. It is estimated that the number of beds in the company will reach 10000 by 2023. (2) Extension M & A: the company will maintain the M & a rhythm of 1-2 hospitals every year. In 2021, the company will acquire Suzhou Yongding hospital and Hezhou Guangji hospital, significantly thickening the company’s performance in 2022.
Related enterprises: haijiya medical.
Market review: this week (April 4-april 8), the biomedical sector fell 3.66%, underperforming the CSI 300 index by 2.59pct and the gem index by 0.02pct, ranking 22nd among the 30 CITIC primary industries. This week, the sub sectors of CITIC medicine all fell to a certain extent, with the decline of 1.71%, 2.16%, 3.25%, 3.49%, 3.66%, 4.18%, 4.87% and 6.15% respectively in traditional Chinese medicine, proprietary Chinese medicine, medical devices, medical services, biomedicine, chemical raw materials, pharmaceutical circulation and chemical agents.
Investment suggestions:
Recent view: high-quality companies have become more and more cost-effective. In the short term, continue to suggest two ideas, preferably:
1. Rapid growth, continuous improvement of performance and reasonable valuation range.
1) vaccines: Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chongqing Zhifei Biological Products Co.Ltd(300122) and Shenzhen Kangtai Biological Products Co.Ltd(300601) ;
2) oral consumables: Yantai Zhenghai Bio-Tech Co.Ltd(300653) (active biological bone will be approved soon); Angel of the times (local invisible orthodontic leader)
3) life related upstream: Jenkem Technology Co.Ltd(688356) (PEG derivative), Nanjing Vazyme Biotech Co.Ltd(688105) (molecular enzyme), Acrobiosystems Co.Ltd(301080) (recombinant protein reagent).
2. Downside risk is limited, waiting for Fundamentals to catalyze.
1) blood products sector (leading enterprises are expected to benefit from the 14th five year plan of pulp stations in many provinces and further open the growth of pulp volume, including Beijing Tiantan Biological Products Corporation Limited(600161) and Hualan Biological Engineering Inc(002007) );
2) pharmacy sector ( Yifeng Pharmacy Chain Co.Ltd(603939) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Lbx Pharmacy Chain Joint Stock Company(603883) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (short-term policy disturbance does not change long-term development logic),
3) private service leaders: haijiya medical and Jinxin reproductive;
4) China sublingual desensitization faucet Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) ;
5) China’s leading pharmaceutical glass enterprise Shandong Pharmaceutical Glass Co.Ltd(600529) .
3. Continue to pay attention to covid-19 antigen detection. 1) Recommended: Guangzhou Wondfo Biotech Co.Ltd(300482) , Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047)
Medium and long term perspective: pay attention to the invariance in change and look for opportunities with relative certainty. The impact of centralized mining continues to expand. The opportunity at the investment level lies in that the establishment of centralized mining is based on “multiple enterprises supply mutually replaceable varieties, and the production capacity can be supplied indefinitely in theory”. The basis for enterprises to maintain product price and profit space is the competition pattern, and the dynamic excellent competition pattern lies in the ability to continuously develop products and product iteration, which remains unchanged.
Start DRG / Dip reform in 2022. As a means of payment, the core role of DRGs is to achieve a balance between improving the efficiency and quality of diagnosis and treatment and ensuring the sustainability of medical insurance through refined medical insurance management. Hospitals that cannot actively adapt to the rules of the game will be eliminated. The opportunity at the investment level lies in that excellent private medical institutions have paid more attention to cost control for a long time, with higher operation efficiency and competitive advantage.
The general trend of industrial development is: China Meheco Group Co.Ltd(600056) industrial manufacturing is upgraded, the competitiveness is continuously improved, and moves upstream in the global production value chain.
The competitiveness of upstream raw materials is prominent:
1) biological “core” – life science support industrial chain: domestic enterprises have developed rapidly, reagent quality has reached the international leading level, and their competitiveness has been continuously improved. Entering the overseas market through global comparative advantage, China benefits from domestic alternative logic, with high growth and great development potential.
2) IVD raw materials and consumables: covid-19 epidemic opens the window for the transfer of global IVD raw materials and consumables production and supply chain to China. Accelerated internationalization process: with the breakthrough of key technologies of Chinese enterprises, not only the localization rate of the Chinese market is accelerating, but also some high-quality enterprises have the strength to compete with international giants.
1. Manufacturing upgrading of pharmaceutical industry and continuous improvement of Competitiveness:
Upstream: life science support industry chain, IVD raw materials and consumables, related targets: Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047) , Acrobiosystems Co.Ltd(301080) , Suzhou Nanomicro Technology Co.Ltd(688690) ; High end medical devices: endoscope and sequencer, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Qingdao Novelbeam Technology Co.Ltd(688677) , Sonoscape Medical Corp(300633) , Aohua endoscope, Micro-Tech (Nanjing) Co.Ltd(688029) ; Huada Zhizao (IPO application in progress); International layout of medical devices, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) ;
Others: Jenkem Technology Co.Ltd(688356) , Shandong Pharmaceutical Glass Co.Ltd(600529) .
2. Pay attention to the supply pattern: blood products, related subjects: Beijing Tiantan Biological Products Corporation Limited(600161) , Boya Bio-Pharmaceutical Group Co.Ltd(300294) and Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) ; Desensitization preparation, related subject matter: Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) .
3. Private medical service sector with differentiated competition. Ophthalmology, Aier Eye Hospital Group Co.Ltd(300015) ; Dentistry, Topchoice Medical Co.Inc(600763) ; Assisted reproduction, Jinxin reproduction; Cancer treatment services, Hagia.
Pharmacy section 4. Related objects: Yifeng Pharmacy Chain Co.Ltd(603939) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Lbx Pharmacy Chain Joint Stock Company(603883) and Yixintang Pharmaceutical Group Co.Ltd(002727) .
5. Aging and consumption upgrading.
Class II vaccine, related targets: Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) and Changchun Bcht Biotechnology Co(688276) ; Invisible orthodontics, related subjects: Angel of the times;
Risk tips: policy risk, price risk, performance risk less than expected, product R & D risk, expansion progress risk less than expected, medical accident risk, uncertainty of overseas covid-19 virus epidemic, M & A integration risk less than expected, etc.
