【行业研究报告】平安好医生-Temporary pains in strategic transition

15Mar2023
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
PAGoodDoctor(1833HK)
Temporarypainsinstrategictransition
Better-than-expectednarrowingofnetlossin2022.PAGoodDoctor
(PAGD)reported2022revenueofRMB6,160mn,downby16%YoY,and
adjustednon-IFRSnetlossofRMB848mn,narrowedby40%YoY.PAGD’s
revenueslightlymissedourforecast/consensusby2.8%/4.5%,respectively,
whileadjustednon-IFRSnetlossbeatourforecast/consensusby12.4%/
20.3%,respectively,thankstothecontinuousmarginimprovementsandcost
savingsunderitsStrategy2.0Continuum.In2022,grossprofitmargin(GPM)
increasedby4.1ppts,mainlysupportedbytheGPMimprovementof4.2ppts
fromitshealthservicesegment.Sellingandmarketingexpenseratiodropped
by6.0pptsin2022,duetotheinherentcostsavingsandeconomiesofscale
fromprovidinghealthmanagementservicestocorporateclients.
Encouragingbusinessdevelopmentsin2022.PAGD’sStrategy2.0
Continuumhaddeliveredpositiveresultsin2022,despitebusiness
Continuumhaddeliveredpositiveresultsin2022,despitebusiness
interruptioncausedbyCOVIDlockdowns.Thecumulativenumberof
corporateclientsservedbyPAGDreached978asofDec2022(vs520as
ofDec2021)andcovered~3mnpaidemployeeswithinthosecorporate
clients(vsmorethan1mnasofDec2021),indicatinganincreasing
acceptanceofPAGD’shealthmanagementservicesamongcorporate
clientsandtheiremployees.Notedthatthenumberofcorporateclientsand
theirpaidemployeesforPAGD’sservicesrepresentedonly~3%and~20%
ofthetotalnumberofcorporatesandtheiremployeeswithinPAGroup’s
businessecosystem,leavingampleroomforfurtherbusinessexpansionfor
PAGD.WiththeliftofCOVID-relatedtravelrestrictionsinChina,weexpect
PAGD’soff-linecorporatecustomeracquisitionstofullyresumetoitsnormal
pacein2023andbeyond.
MarginimprovementstocontinueunderStrategy2.0Continuum.GPM
increasedto27.4%in2022from23.3%in2021,duetoPAGD’sproactive
reductioninthelow-marginonlinemallbusiness.Besides,selling&
marketingexpenseratiodeclinedto17.9%in2022from24.0%in2021,
drivenbytheinherentcostsavingsandeconomiesofscalefromproviding
healthmanagementservicesforcorporateclients.Weanticipatesimilar
trendsinGPMandselling&marketingexpenseratioin2023andthereafter,
contributingtothenarrowingofadjustednon-IFRSnetloss.
MaintainBUY.WecutourTPfromHK$28.15toHK$24.24,basedona10-
yearDCFmodel(WACC:11.1%,terminalgrowthrate:3.0%)toreflectour
loweredearningsforecasts.Goingforward,weexpectPAGDtoregain
positiverevenuegrowthof+12.4%/+13.5%/+14.4%YoYin2023E/24E/
25E,consideringthepost-pandemicbusinessresumptionandthegrowing
penetrationrateofPAGD’smedicalservicesinChinahealthcareindustry.
Accordingly,weforecastPAGD’sadjustednetlosstobesequentially
narrowedtoRMB702mn/RMB288mn/RMB40mnin2023E/24E/25E.