CHIMIN HEALTH MANAGEMENT(603222)：HIGH-END MEDICAL SERVICE LEADER STARTS SECOND CURVE WITH HOSPITALS LIKE BOAO THAT ENJOY HIGH POLICY BARRIERS AND NEW TECHNOLOGIES

　　Investment Thesis
　　Core logic: BoAo International Hospital is a scarce asset in the A-share market, with high policy barriers, a top-notch Japanese expert team, international new technology and new equipment, and high profit margins. After the pandemic, high-end medical services such as BoAo International Hospital and Hubei Ezhou Second Hospital are quickly expanding. With clear turning points in instrument & large infusion equipment in 2023 and the first stock incentive after IPO in place, we expect the company to experience super high growth from 2023 to 2025 as it has disposed of non-performing assets and recorded provision for goodwill.
　　Enjoying international influence and high policy barriers, BoAo International Hospital is likely to start its second curve with the regenerative medicine innovation platform. Ezhou Second Hospital, a third-level comprehensive hospital, is about to be put into production, and we expect rapid release of its earnings. High policy barriers: BoAo International Hospital is located in the BoAo Lecheng Pilot Zone, with the privilege of first trial, high policy barriers for new technology, and enjoys policy benefits as a local leading hospital. Top-notch expert team: with a powerful professional team including Japan's Oda Hajime, it has introduced the full set of immunocyte culture technology approved by the Japanese Ministry of Health at Oda Hospital and imported culture solutions from Japan. The autologous adipose stem cells have obtained three inspection reports from the National Institutes for Food and Drug Control. International equipment: German INUS dual-membrane targeted blood purification new technology, and four high-end medical beauty equipment such as HyalDew （subcutaneous filler material for plastic surgery） imported from Bioplus, a listed company in South Korea. New R&D directions: the company develops research on four aspects of diseases such as knee osteoarthritis and chronic obstructive pulmonary disease. We expect BoAo International Hospital to achieve revenues of RMB200/350/500mn respectively in 2023-2025. The new hospital area of Ezhou Second Hospital has been completed, and the trial-run & official operation are scheduled in March & May 2023. The new and old hospital areas of Ezhou Second Hospital have a total of 1200 beds. The old hospital area has been operating at full capacity and contributes to an annual revenue of around RMB100mn and a profit of ~RMB15mn. We expect the peak revenue/profit of the old and new hospital areas of Ezhou Second Hospital to reach RMB600/100mn respectively.
　　For the first time after the IPO, the company released its first stock incentive plan, demonstrating confidence in its development and binding the interests of core management team for the medium term. 42 people are covered and assessed by the plan from 2023 to 2025. The company-level performance assessment target for 2023-2025 is a net profit of not less than RMB180/230/300min, with a CAGR of 30%. The exercise price is set at RMB12.01, equivalent to the current stock price of the company, demonstrating strong confidence of the company.
　　Earnings Forecast & Rating: We expect it to achieve net profit of RMB37/190/274mn in 2022-2024, with corresponding P/E at 190X/37X/26X. We initiate with the Buy rating.
　　Risks: Slower-than-expected promotion of new products or recovery of hospital demand.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。