20220822-招银国际-平安好医生-01833.HK-Early_achievements_of_Strategy_2.0_5页_1mb

PA Good Doctor (1833 HK) Summary

Core Content

PA Good Doctor (PAGD) is a healthcare company under the Ping An Group, focusing on health management services for corporate clients as part of its Strategy 2.0. The company has reported its first-half results for 2022 (1H22), showing a mix of challenges and progress in its financial and operational performance.

Main Points

Financial Performance in 1H22

• Revenue: RMB2,828 million, a 26% YoY decline.
• Adjusted Non-IFRS Net Loss: RMB390 million, significantly narrower than RMB791 million in 1H21.
• Gross Profit Margin (GPM): Increased by 4.0ppts to 27.3% from 23.3% in 2021, due to the reduction in low-margin online mall business.
• Registered Users: Increased by 4.2% to 441 million as of June 2022 (from 423 million as of December 2021).
• Paying Users: The cumulative number of paying users in the last twelve months reached 40 million, with a monthly paying user conversion rate of 32.0% (up from 24.8%).

Strategy 2.0 Implementation

• The strategy focuses on shifting customer acquisition from individual to corporate clients.
• Offline visits are essential for acquiring corporate clients.
• Despite challenges from the pandemic, PAGD made progress in corporate client acquisition, reaching 749 clients by June 2022 (up from 520 in December 2021).
• The company's total accessible market includes approximately 70 million corporate employees connected with Ping An Group.

Cost Management

• Selling and marketing expense ratio dropped to 18.5% in 1H22 from 24.0% in 2021, driven by cost-saving measures and economies of scale in corporate health management services.
• Net loss continues to narrow, with forecasts of positive net profit expected from 2025.

Key Financial Forecasts

Analyst Ratings

• Maintain BUY: Based on a 10-year DCF model with a WACC of 11.1% and terminal growth rate of 3.0%, the target price remains at HK$28.40.
• Upside/Downside: 43.7% from the current price of HK$19.76.

Shareholding and Stock Data

• Market Cap: HK$22,107.7 million.
• Total Issued Shares: 1,118.8 million.
• Shareholding Structure:
  • Ping An Insurance: 39.4%
  • Sounda Properties: 9.4%

Valuation Metrics

• DCF Valuation (RMB mn):
  • 2022E: -1,418
  • 2023E: -967
  • 2024E: -480
  • 2025E: +215
  • Terminal Value: 62,332
• Equity Value (RMB mn): 27,009
• Price per Share (HK$): HK$28.40

Profitability Metrics

• Gross Profit Margin: Increased from 23.3% in 2021 to 27.3% in 1H22, then to 32.1% in FY24E.
• Operating Margin: Improved from -17.29% in 1H22 to -3.02% in FY24E.
• Net Margin: Improved from -16.62% in 1H22 to -2.64% in FY24E.
• ROE: 7.9% in 1H22, down from 10.3% in FY21, but expected to decrease further to 2.1% in FY24E.

Analysts

• Jill WU, CFA: Contact: (852) 3900 0842, Email: jillwu@cmbi.com.hk
• Benchen HUANG, CFA: Email: huangbenchen@cmbi.com.hk

Risk and Disclaimer

• The report is not investment advice and should not be relied upon for investment decisions.
• CMBIGM does not guarantee the accuracy, completeness, or timeliness of the information provided.
• The report may be subject to conflicts of interest due to potential business relationships with the companies mentioned.
• The information is for the use of intended recipients and may not be reproduced or distributed without prior written consent.