20230315-招银国际-平安好医生-01833.HK-Temporary_pains_in_strategic_transition_5页_1mb

PA Good Doctor (1833 HK) Summary

Core Content and Key Information

PA Good Doctor (PAGD) is a company within the Ping An Insurance Group, focusing on health management services. The document outlines the company's financial performance, strategic initiatives, and future outlook, highlighting its transition under the Strategy 2.0 Continuum. It also provides analyst ratings, valuation metrics, and market data.

Financial Performance (2022)

• Revenue: RMB6,160 million, down 16.0% YoY, slightly below forecast and consensus.
• Adjusted Non-IFRS Net Loss: RMB848 million, narrowed by 40.0% YoY, exceeding forecast and consensus.
• Gross Profit Margin (GPM): Increased by 4.1 ppts to 27.4%.
• Selling and Marketing Expense Ratio: Declined by 6.0 ppts to 17.9%, driven by cost savings and economies of scale from corporate clients.

Business Developments

• Corporate Clients: Reached 978 by Dec 2022, up from 520 in Dec 2021.
• Paid Employees: Served approximately 3 million employees within corporate clients, up from over 1 million in Dec 2021.
• Growth Potential: Despite the impact of the pandemic, the company has seen increasing acceptance of its services, with potential for further expansion.

Strategic Transition

• Strategy 2.0 Continuum: Focuses on margin improvements and cost savings, contributing to better financial results.
• Future Revenue Growth: Expected to regain positive growth of +12.4% in 2023E, +13.5% in 2024E, and +14.4% in 2025E.
• Adjusted Net Loss Narrowing: Forecasted to narrow to RMB702 million in 2023E, RMB288 million in 2024E, and RMB40 million in 2025E.

Analyst Recommendations

• Rating: Maintain BUY.
• Target Price: HK$24.24 (Previously HK$28.15).
• Upside/Downside: 32.7%.
• Current Price: HK$18.26.

Valuation and Financial Metrics

• DCF Valuation (10-year): Based on a WACC of 11.1% and terminal growth rate of 3.0%, the total present value is RMB23,052 million.
• P/S Ratio: 2.5x in 2023E, declining to 1.9x in 2025E.
• Net Gearing: Decreased from 26.7% in 2021A to 21.0% in 2025E.
• Current Ratio: 3.0x in 2023E, decreasing to 2.4x in 2025E.
• ROE: Expected to decrease from 6.0% in 2023E to 1.1% in 2025E.

Shareholding and Stock Data

• Market Cap: HK$19,736.6 million.
• Avg 3 mths t/o: HK$20.9 million.
• 52w High/Low: HK$31.65 / HK$13.70.
• Total Issued Shares: 1,080.9 million.

Shareholding Structure

• Ping An Insurance: 39.4%.
• Sounda Properties: 9.4%.

Share Performance

Analyst Certification

• The analyst certifies that the views expressed accurately reflect personal views and that there are no conflicts of interest.

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.

Important Disclosures

• The report is not tailored to individual investors and is not an offer or solicitation to buy or sell any security.
• CMBIGM is not liable for any loss or damage incurred from reliance on the report.
• The report is for the use of intended recipients only and may not be reproduced or distributed without consent.

Legal and Distribution Information

• UK: Only for persons falling within Article 19(5) of the Financial Promotion Order or High Net Worth Companies, etc.
• US: Only for major US institutional investors. Not a registered broker-dealer.
• Singapore: Distributed by CMBISG, an Exempt Financial Adviser, with legal responsibility only to the extent required by law.