Morgan Stanley published a research report on Safe Doctor (01833) on March 20, 2024. The bank's analysts said that considering the company's adjusted net loss was further reduced, and the front-end+back-end 'expansion progressed smoothly,” the target price set for Ping An Good Doctor was HK$21, which meant that the stock had room to rise 71%.
The report shows that Ping An Good Doctor's revenue increased 10.3% year-on-year in the second half of 2023. By business segment, the medical service business grew 0.8% year on year in the second half of 2023, and the health service business increased 18.6% year on year. In the second half of 2023, the company's gross margin increased by 0.2 percentage points to 32.4%, and the sales ratio decreased by 1.5 percentage points to 15.7%. As a result, the adjusted net loss for the second half of 2023 was less than expected, at RMB 54.8 million.
Furthermore, as of December 2023, revenue from the “front end” increased 14.8% year over year, mainly due to a 7.5% increase in average revenue and a 6.7% increase in long-term paying users. Revenue from the “back end” increased 81.2% year over year, while average revenue increased 3.6%, and long-term paying users increased 75%. Overall, long-term paying subscribers declined 7.3% year over year.
Looking ahead, Ping An Medical Technology expects the growth of “front-end” revenue to exceed the growth rate of the insurance industry or China's GDP. It is expected to grow at a low double-digit compound annual growth rate in the near future, while “back-end” revenue is expected to grow at a medium double digit rate in 2024.
At the same time, gross margins for medical services and health services are expected to remain almost flat, while operating expenses should be on a downward trend. Among them, geriatric care services were identified as a key initiative.