\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 763 Topchoice Medical Co.Inc(600763) )
Key investment points
Event: in 2021, the company realized an operating revenue of 2.781 billion yuan (+ 33.19%) and a net profit attributable to the parent company of 703 million yuan (+ 42.67%). In Q1 2022, the operating revenue was 655 million yuan (+ 3.74%), and the net profit attributable to the parent company was 166 million yuan (+ 1.25%). The performance was lower than our expectation, which was mainly affected by the epidemic.
The proportion of revenue from branches and outside the province increased, and the level of profit margin continued to improve. By business, in 2021, the company’s medical service revenue was 2.632 billion yuan (+ 31.06%), accounting for 94.67%; Among them, the income of planting, orthodontics, pediatrics, restoration and large comprehensive accounted for 17%, 21%, 20%, 16% and 26% respectively, with a year-on-year increase of 38%, 30%, 32%, 25% and 31% respectively. In the whole year, planting and orthodontics with high gross profit still maintained a rapid growth. In 2021, the company’s operating revenue in Zhejiang Province was 2.374 billion yuan (+ 31%), accounting for 90%, of which the revenue of the regional general hospital (hangkou) was 732 million yuan (+ 21%), accounting for 31%, a year-on-year decrease of 2pct; The revenue of regional branches was 1.642 billion yuan (+ 36%), accounting for 69%, up 2pct year-on-year; The proportion of revenue of regional branches increased, and the performance contribution increased. In 2021, the company’s overall gross profit margin and net profit margin were 46.06% (+ 0.89pct) and 28.27% (+ 2.17pct) respectively. In 2022q1, the company’s gross profit margin and net profit margin were 46.75% and 29.07% respectively. The company’s profit margin continued to improve.
The opening of dandelion branch is advancing steadily, which will significantly contribute to the growth of the company’s performance in the future. By the end of 2021, the company has 43 oral medical institutions in Zhejiang Province, and 8 branches are in the stage of preparation, construction and acceptance respectively. Another 10 branches have completed the project and are about to start construction. The company makes corresponding adjustments according to the construction progress of dandelion team and three person group, controls the opening progress, and ensures the successful and efficient expansion of branch opening. Wuhan cunji stomatological hospital, a regional general hospital built in three central cities outside the province, Wuhan, Xi’an and Chengdu. In 2021, the outpatient service of Wuhan cunji stomatological hospital increased by 82% year-on-year, and the revenue increased by 63% year-on-year to achieve profit and loss balance. Its first dandelion branch will also be opened in 2022. Xi’an cunji medical center is composed of Stomatology, ophthalmology and obstetrics. It was put into trial operation in October 2020, which is better than the level of Wuhan cunji in the same period, and the development is in line with expectations. In the medium term, Zijingang hospital, as the company’s key head and face medical center, has multiple functions such as disease prevention, health care, scientific research and teaching, so as to further improve the company’s reception capacity and ensure the company’s medium-term growth momentum. In the long run, the company’s advantages of “Regional Central Hospital + characteristic hospital” are expected to continue. Dandelion branch enters the investment return cycle after the growth cycle, which will promote the company’s performance to enter the stage of rapid growth again.
Profit forecast and investment rating: considering the impact of epidemic factors and the investment of dandelion branch on the short and medium-term profit of the company, we adjusted the net profit attributable to the parent company from 975 / 1295 million yuan to 807 / 1070 million yuan from 2022 to 2023, and it is expected to be 1.374 billion yuan in 2024, corresponding to the current market value, and the PE valuation from 2022 to 2024 is 49 / 37 / 29 times respectively. In the long run, with the recovery of the epidemic, the dandelion branch will gradually mature in the future, which will promote the accelerated growth of the company’s performance. Maintain the “buy rating”.
Risk warning: the risk of hospital expansion or integration is less than expected; The risk that the hospital’s profit improvement is less than expected; The risk of repeated outbreaks.
