\u3000\u3 Shengda Resources Co.Ltd(000603) 882 Guangzhou Kingmed Diagnostics Group Co.Ltd(603882) )
Event:
On April 26, 2022, the company released the annual report of 2021 and the performance of the first quarter of 2022: in 2021, the company realized an operating revenue of 11.943 billion yuan, a year-on-year increase of 44.88%; The net profit attributable to the parent company was 2.22 billion yuan, a year-on-year increase of 47.03%; The net profit deducted from non parent company was RMB 2.189 billion, with a year-on-year increase of 50.18%. In the first quarter of 2022, the company’s revenue was 4.251 billion yuan, a year-on-year increase of 58.70%; The net profit attributable to the parent company was 850 million yuan, a year-on-year increase of 58.00%.
Comments:
The performance of 2021 and 2022q1 exceeded expectations and continued high-quality development
In 2022, the company’s revenue was RMB 11.943 billion, mainly due to the rapid growth of the inspection business volume. The medical diagnosis service revenue was RMB 11.304 billion, a year-on-year increase of 43.63%, of which the solid tumor diagnosis business increased by 45.87%, the neurological and clinical immune diagnosis business increased by 38.21%, the infectious diseases diagnosis business (excluding covid-19) increased by 34.81% and the blood disease diagnosis business increased by 31.9% year-on-year. The operating efficiency of the company continued to improve. In 2021, the gross profit margin was 47.29%, an increase of 0.6% year-on-year, and the proportion of special inspection business increased to 50.45%.
Further strengthen the clinical development pattern
The company is committed to deep cultivation of testing services and continuous optimization of service capacity around clinical needs. In 2021, the revenue of the company’s tertiary hospitals accounted for 35.86%, with a year-on-year increase of 33.27%, of which the revenue of the top 100 tertiary hospitals increased by 55.11% year-on-year. The company continues to deepen its cooperation with top-level tertiary hospitals – 1) promote the strategic cooperation of industry university research transformation, and carry out the transformation cooperation of car-t related monitoring projects with Shanghai Tongji Hospital; Cooperate with the model transformation of “female youth evaluation” of the Third Hospital of Beijing Medical University; The company has cooperated with the “red house birth defect alliance” of the affiliated obstetrics and Gynecology Hospital of Fudan University to help the alliance build an integrated diagnosis and treatment platform for birth defects and a three-dimensional prevention and control network. 2) it has established a closed loop of “Jinyu university top three hospitals”. At present, the company has cooperated with Nanjing Medical University, Wangjing Hospital of Chinese Academy of traditional Chinese medicine Sun Yat sen University and other universities carry out multi center scientific research projects in the fields of hypertension, osteoporosis and senile sexual health. 3) Further increase new testing projects and improve service quality. In 2021, the company completed the development of nearly 200 key new projects and the upgrading of reports, and actively promoted the multi center layout of solid tumors, infections and other disciplines.
Multiple ecological platforms are taking shape at an accelerated pace, and medium – and long-term deep cultivation and digital construction are under way
The company adopts the mode of combination of multi-disciplinary diagnosis and treatment and multi-technical platform. In terms of technical platforms, the company has 75 kinds of detection technologies, covering mainstream technologies from conventional to high-end, and has built high-tech platforms such as clinical genome, clinical mass spectrometry, flow cytometry and pathological diagnosis center. In terms of testing items, at present, the company can provide more than 3000 testing items and has joined 20 national disease alliances and platforms. In terms of market coverage, the company serves more than 23000 medical institutions, more than 2000 grass-roots medical institutions, and cooperates to build 670 laboratories, of which the number of secondary and tertiary hospitals has increased to 80%. From the medium and long-term perspective, the company has entered the era of medical examination 4.0, continued to promote the digital strategic transformation, and built around the three directions of business digitization, digital business and platform foundation. At present, there are 34 projects under construction, and the digital transformation has consolidated the foundation for the sustainable and high-quality development of the company.
Profit forecast: the company is the leader of the third-party medical laboratory, covid-19 epidemic broke out in scattered spots, and the detection demand still exists. It is optimistic about the medium and long-term digital strategic layout or further expand its advantages. It will increase the revenue from 9.072 and 11.762 billion to 13.152 and 12.551 billion yuan in 20222023, and it is expected that the revenue in 2024 will be 14.168 billion yuan, the net profit of 1.790 and 2.369 billion yuan in 20222023 will be increased to 2.560 and 2.465 billion yuan, and the net profit in 2024 will be 2.833 billion yuan, EPS is 5.50, 5.29 and 6.08 respectively. The current share price corresponds to PE of 13.80, 14.34 and 12.48 respectively from 2022 to 2024, maintaining the “buy” rating.
Risk warning: covid-19 epidemic progress is uncertain, the risk of test item price reduction, the profit and loss balance of loss laboratories is less than expected, the risk of industrial policy change and quality control risk.
