Jinxin Fertility (1951 HK) Summary
Core Content and Key Insights
Jinxin Fertility is a leading private hospital chain in China that provides comprehensive IVF services. The company's multi-region operations, including Chengdu, Shenzhen, Wuhan, Hong Kong, and the United States, were significantly impacted by the strict pandemic control measures in China and the forced halt of cross-border IVF services at its US branch in 2022. These challenges led to a sluggish financial performance in 2022, particularly in terms of net profit. However, with the relaxation of pandemic policies in late 2022, the company is expected to experience a business recovery in 2023.
The core cities of Chengdu and Shenzhen, which accounted for 72% and 68% of Jinxin's total revenue in 2020 and 2021 respectively, were heavily affected by multiple lockdowns and outbreaks. Despite this, the company anticipates that IVF demand will rebound in 2023, as patients delayed treatment during the pandemic and concerns about post-infection health issues are likely to subside.
The Chinese government has introduced several policies to stimulate the birth rate, including the Guiding Opinions to Further Improve and Implement Active Measures to Support Birth Rate in August 2022 and a draft plan for children-raising subsidies in January 2023. These policies are expected to further support Jinxin's business, given its position as the largest private provider of IVF services in the country.
Financial Performance and Forecasts
Earnings Summary (YE 31 Dec)
| Year |
Revenue (RMB mn) |
YoY Growth (%) |
Net Profit (RMB mn) |
Adjusted Net Profit (RMB mn) |
EPS (Adjusted) (RMB) |
| FY20A |
1,426 |
-13.5% |
252 |
372 |
0.15 |
| FY21A |
1,839 |
28.9% |
340 |
455 |
0.18 |
| FY22E |
2,342 |
27.4% |
268 |
346 |
0.14 |
| FY23E |
3,097 |
32.2% |
497 |
550 |
0.22 |
| FY24E |
3,771 |
21.8% |
660 |
725 |
0.29 |
Financial Metrics
| Metric |
FY22E |
FY23E |
FY24E |
Change (%) |
| Revenue |
2,342 |
3,097 |
3,771 |
-7.64% |
| Gross Profit |
937 |
1,301 |
1,602 |
-12.04% |
| Operating Profit |
422 |
672 |
860 |
-20.14% |
| Adjusted Net Profit |
346 |
550 |
725 |
-22.97% |
| Adjusted EPS |
0.14 |
0.22 |
0.29 |
-22.97% |
| Gross Margin |
40.00% |
42.00% |
42.50% |
-2.00ppt |
| Operating Margin |
18.00% |
21.70% |
22.80% |
-2.82ppt |
| Net Margin |
14.79% |
17.78% |
19.22% |
-2.94ppt |
| ROE (%) |
3.0 |
5.3 |
6.7 |
-2.94ppt |
Valuation and Target Price
- DCF-based Target Price (TP): HK$11.25 (revised from HK$11.73)
- Current Price: HK$7.65
- Upside Potential: 47.1%
- Valuation Metrics:
- P/E (x): 33.3 (FY23E), 25.1 (FY24E)
- P/B: 1.7 (FY23E), 1.6 (FY24E)
- P/CFPS: 22.3 (FY23E), 18.6 (FY24E)
Investment Recommendation
- Maintain BUY for Jinxin Fertility, as the company is expected to benefit from the policy environment aimed at increasing the birth rate and the anticipated recovery in IVF demand.
- The company's revenue is forecasted to grow by 27% in FY22E, 32% in FY23E, and 22% in FY24E.
- Adjusted non-IFRS attributable net income is expected to grow by -24% in FY22E, 59% in FY23E, and 32% in FY24E.
Shareholding and Stock Data
| Metric |
Value (HK$) |
| Market Cap |
19,253.9 mn |
| Avg 3 mths t/o |
5.8 mn |
| 52w High/Low |
9.29/3.59 |
| Total Issued Shares |
2,516.9 mn |
Share Performance
| Period |
Absolute |
Relative |
| 1-mth |
9.8% |
-1.1% |
| 3-mth |
113.1% |
60.7% |
| 6-mth |
22.4% |
17.1% |
Shareholding Structure
| Shareholder |
% Ownership |
| Jinxin Fertility BV |
12.7% |
| HRC Investment |
11.9% |
Analysts and Ratings
- Analysts: Jill WU, CFA and Benchen HUANG, CFA
- Ratings:
- BUY: Stock with potential return of over 15% over next 12 months
- OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over next 12 months
Analyst Certification
- The analyst certifies that the views expressed in the report accurately reflect their personal views and that no part of their compensation is related to the report's content.
- The analyst confirms that they have not traded in the stock covered in the report within 30 days prior to its release and will not do so within 3 business days after release.
Risk and Disclaimer
- There are risks involved in trading any securities.
- The report is not tailored to individual investors and should not be construed as an offer or solicitation to buy or sell any security.
- The information is based on publicly available data and is not guaranteed for accuracy or completeness.
- CMBIGM is not a registered broker-dealer in the U.S. and does not provide investment advice.
