Mei Nian Health (002044): Performance in line with expectations Expect long-term growth after solid foundation
The third quarter of 2019 results are in line with our expectations. Midea Health announced the first three quarters of 2019 results: revenue 62.78 ppm, a ten-year increase of 7.89%; net profit attributable to mother 3.91 trillion, down 5 a year.46%.Corresponds to a profit of 0.10 yuan, a decline of 23 per year.08%.The company started to recover in Q3 2019, and its performance was in line with our expectations. Development trend Operations are gradually recovering, and Q3 results are in line with expectations.Affected by the 2018 H1 inspection base and the impact of the 2018H2 medical examination industry, the company entered a phased adjustment in the first half of 2019.After Q3 2019, the company’s operations gradually resumed. In Q3, the company achieved revenue of 26.3.6 billion, net profit attributable to the parent company.7.4 billion, an increase of 15 each year.58%, 46.80%, the company’s operations gradually recovered in the third quarter.We expect that through the improvement of the company’s internal control system and the fading of the industry, the company’s newly launched “Miannian Good Doctor” and “1 + X” series this year will promote the development of various maintenance services and the improvement of the overall operating quality.From January to September, the financial expense ratio rose due to the increase in US dollar debt and other debt.07ppt to 5.17%; marketing reform + scale-up led to a decline in sales expense ratio3.22ppt to 22.84%, the overall rate during the period dropped 0.97ppt to 35.80%. Increase compliance management efforts, and high short-term investment is conducive to long-term stable development.After the industry shock in 2018, the company actively strengthened the construction of its internal control management system, including the face recognition authorization for key positions, the recruitment of medical personnel, the construction 杭州桑拿 of a national branch center monitoring system, and the re-optimization of external consulting companies to optimize processes and minimize the impact of human governance onThe impact of service quality and other transformations.From January to September, the company’s operating cash flow expenditure items such as purchasing labor services, paying employees’ cash, and paying cash related to other operating activities increased to varying degrees. The net operating cash flow in the first three quarters was -6.59 trillion, down 657% from the low base of 8615 trillion last year; software and hardware costs increased, and gross profit margin was 41.47%, a decline of 4 per year.87ppt.The increase in short-term compliance management investment is conducive to the company’s long-term stable development. The core development logic has not changed, and we expect continued rapid growth after the reform.The chain expansion of third- and fourth-tier cities and the promotion of individual inspection services continue to be promoted as the company’s long-term development strategy.Grass-roots operating costs and software and hardware advantages will help the company expand its leading edge and improve the quality of its operations; the promotion of the individual inspection business will help increase the unit price of customers and at the same time increase the level of customer stickiness.In 2018, the company continued to promote sales and internal management reforms, and has achieved staged results. It is expected that the company will continue to grow rapidly after the foundation is consolidated. Earnings forecasts and estimates We maintain the company’s 2019/2020 earnings forecasts unchanged, with EPS expected to be 0 respectively.27 yuan, 0.36 yuan, the current expected corresponding P / E for 2019/2020 is 50X / 38X, considering the overall improvement of the pharmaceutical sector conversion and the company’s restorative growth since the second half of the year, we raised our target price by 18.52% to 16.00 yuan, corresponding to P / E in 2019/2020 is 60X / 45X, which has 20% upside compared with the current consensus, maintaining the outperform industry rating. Management risk in the process of risk chain expansion; uncertainty of the company’s C-end conversion cycle.