20230223-招银国际-医渡科技-02158.HK-Eyes_on_post-COVID_business_recovery_8页_1mb

Yidu Tech (2158 HK) Company Update Summary

Core Content and Key Information

Yidu Tech is a healthcare technology company that provides data analytics and digital solutions to hospitals, healthcare institutions, regulators, and policy makers. The firm's performance in FY23E was impacted by the resurgence of the pandemic in China, which led to project delays. Despite this, the company is expected to recover as China lifts restrictions, with a focus on long-term digitalization trends in the healthcare sector.

The research recommends BUY with a target price of HK$14.07, implying a 10.1x FY24E P/S valuation. This is based on a SOTP (Sum of the Parts) valuation method, applying a 50% premium to respective business segment peers' FY23E P/S to reflect higher growth and margin potential.

Financial Highlights

Segment Analysis

• Big Data Platform and Solutions (BDPS):

  • FY23E revenue was down 21% YoY to RMB124mn due to project delays.
  • Expected to grow 29% YoY in FY24E post-pandemic recovery.
  • Revenue mix: 29% of total revenue in FY23E.
  • Gross margin: 31.8% in FY23E, down from 35.3% in FY22E.

• Life Sciences Solutions (LSS):

  • FY23E revenue grew 0.6% YoY to RMB147mn, but was dragged by bidding and implementation delays.
  • Gross margin was 14.5% in FY23E, down from 20.0% in FY22E.
  • Expected to see a +2-3% improvement in GPM as revenue grows at 23% CAGR in FY22-25E.

• Health Management Platform and Solutions (HMPS):

  • FY23E revenue grew 7% YoY to RMB361mn.
  • Expected to maintain 11% CAGR in FY22-25E.
  • Revenue mix: 37% of total revenue in FY23E.

Earnings Revision

The company revised its FY23-25E revenue estimates downward by 45-57% due to a slower post-pandemic recovery in digitalization. The earnings forecast is now lower than the previous estimates, with the SOTP-based TP reflecting this revised outlook.

Valuation and Market Position

• Target Price: HK$14.07 (a 45.5% increase from the previous TP of HK$32.12)
• Valuation Method: SOTP-based, using 12x P/S for BDPS, 15x P/S for LSS, and 4x P/S for HMPS.
• Valuation Implication: 10.1x FY24E P/S.
• Peer Comparison: Yidu Tech is compared with other healthcare tech companies, including Winning Health, B-soft, JD Health, and Ali Health. The firm's valuation is in line with the mean P/S of peers.

Operating Model

• Revenue Breakdown:
  • BDPS: RMB281mn (FY23E), 29% of total revenue.
  • LSS: RMB321mn (FY23E), 33% of total revenue.
  • HMPS: RMB361mn (FY23E), 37% of total revenue.
• Growth Drivers:
  • Post-COVID recovery in the healthcare digitalization trend.
  • Improving operating leverage and better cost control.
• Key Assumptions:
  • BDPS revenue is expected to grow at 29% CAGR.
  • LSS revenue is expected to grow at 23% CAGR.
  • HMPS revenue is expected to grow at 11% CAGR.

Risk Factors

• Tightening regulations in the healthcare sector.
• Intensifying competition from other healthcare tech firms.
• Uncertainty in post-pandemic recovery of digitalization in the healthcare industry.

Shareholding and Performance

• Key Shareholders:
  • Ms. Gong Yingying: 42.18%
  • GIC: 4.98%
• Share Performance:
  • 1-month: +48.5%
  • 3-months: +59.8%
  • 6-months: +23.2%

Analyst Certification and Ratings

• Analyst Certification: The research analyst certifies that the views expressed reflect personal opinions and are not influenced by compensation.
• CMBIGM Ratings:
  • BUY: Potential return of +15% over the next 12 months.
  • OUTPERFORM: Industry is expected to outperform the broad market benchmark.

Summary of Key Points

• Yidu Tech is a healthcare digitalization company with a diversified business model.
• FY23E was negatively impacted by the pandemic, but recovery is expected in FY24E.
• The firm has a BUY rating with a target price of HK$14.07.
• Revenue is expected to grow at 11% CAGR in FY22-25E.
• The company is positioned to benefit from long-term healthcare digitalization trends.
• Valuation is based on SOTP, applying a 50% premium to peers.
• Risks include regulatory tightening and increased competition.
• The firm has a positive outlook on its ability to improve margins and operating leverage.