As a state-owned state-controlled listed company with medical and health as its main business, Global Medical (2666. HK) has made a huge breakthrough in the specialty industry. According to the 2023 annual results announcement released by Universal Medical on March 27, the business revenue of the specialty and health industry increased by 190.7% year-on-year to 244 million yuan, and the net profit achieved a rapid growth of 271.8% to 32 million yuan. Among them, the equipment full-cycle management business has achieved a leap in energy level, contributing reported revenue of 243 million yuan in 2023, an increase of 241% over the same period of last year, and net profit of 35 million yuan, an increase of 208% over the same period of last year.
In the view of Zhitong Financial APP, the company's specialty and industrial sectors have performed well, and the explosive growth in the future is worth looking forward to.
First, the blue ocean of the 100 billion market is broad, and the integration of the central enterprise industry has inherent advantages
Taking the full-cycle management of medical equipment, which is the first to achieve a breakthrough in performance, as an example, the current domestic maintenance market size exceeds 100 billion yuan and shows a double-digit growth trend. In recent years, with the continuous introduction of various national policies on the high-quality development requirements of public hospitals, the full-cycle management service model of medical equipment has become more and more favored by customers.
Further analysis, the current 100 billion maintenance market, 70% is still occupied by the original factory, although the third-party maintenance occupies 30% of the share, but the maintenance enterprises show the characteristics of "small, scattered, miscellaneous", service capabilities and service quality are uneven, and in the past three years, because of the rapidly changing external environment and the lack of standardized internal management, many third-party companies in the industry are facing survival difficulties, there are opportunities for industry integration.
Especially for the equipment maintenance of public hospitals, its requirements for high-quality development and compliance are more urgent. Zhitong Financial APP understands that medical equipment, as the core asset of the hospital, is related to the quality of diagnosis and treatment and the level of service to patients, whether it is safe operation or full use of technical value. Therefore, professional, high-quality, and cost-effective full-cycle management services for medical equipment are an important guarantee and support for safe and efficient diagnosis and treatment.
As a state-owned enterprise, Universal Medical can provide standardized support in promoting the cost reduction and efficiency increase of hospital equipment and promoting the consensus of industry standards, and has the conditions for first-mover management advantages.
Zhitong Financial APP also observed that the State Council recently issued the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in", which mentions: strengthening the construction of a high-quality and efficient medical and health service system, promoting the iterative upgrading of medical and health equipment and information facilities, and encouraging qualified medical institutions to speed up the renewal and transformation of medical equipment such as medical imaging, radiation therapy, remote diagnosis and treatment, and surgical robots. Promote the renovation and upgrading of wards in medical institutions, and make up for the shortcomings of the ward environment and facilities.
It can be seen that the market size of the equipment full-cycle management sector is huge, and the blue ocean is broad, and Global Medical, as a central enterprise, is bound to give full play to its unique advantages, and its growth is expected in the future.
Second, the dual empowerment of "soft and hard power", the explosive growth of equipment full-cycle management can be expected
As a benchmark enterprise for central enterprises to run medical institutions, Universal Medical gives full play to its own advantages, actively grasps the integration opportunities of the third-party maintenance industry, and builds the core competitiveness of "efficient operation + specialized technology", so as to achieve the development vision of "a leader in the whole life cycle management of medical equipment".
With the steady advancement of the company's industry integration strategy, the full-cycle management business of global medical equipment is developing towards specialization, scale, systematization and maturity, accelerating the construction of a leading brand in the central enterprise industry. As an important support for the company's health industry segment, the equipment full-cycle management business will achieve a leap in energy level in 2023:
Rapid expansion of market structure/business territory: During the reporting period, the company continued to accelerate the industry integration strategy, and successfully acquired Kaisi Xuanda, a leading domestic medical equipment maintenance company, and Tuozhuang Medical, a leading enterprise in Shandong region. It is understood that as a leading enterprise in the industry, Kaisi Xuanda's maintenance capabilities can cover mainstream medical imaging equipment and small and medium-sized equipment such as life first aid, respiratory anesthesia, hemodialysis, etc., and the service scope covers the whole country. Tuozhuang Medical is a leading enterprise in the third-party maintenance industry in Shandong, and its service radius can cover the whole area of Shandong Province. With the joining of Kaisi Xuanda and Tuozhuang Medical, Global Medical currently serves 720 customers and has a total asset under management of nearly 20 billion yuan. Among them, there are 313 tertiary hospital customers with total assets under management of about 9 billion yuan, and about 400 secondary hospitals with total assets under management of about 11 billion yuan.
The company has established solid cooperative relations with more than 10 well-known equipment manufacturers at home and abroad, such as GE, Philips and Siemens, and actively cooperated in after-sales service, spare parts supply, talent training and academic exchanges. At present, all the service subjects of the company are national high-tech industries, with a team of more than 700 professional equipment maintenance engineers, a self-repair coverage rate of more than 85%, and a 3-day repair rate of more than 90%. With the improvement of the company's core capabilities and the accelerated integration of external resource advantages, it has laid a solid foundation for the company to become a leader in the industry segment.
According to the analysis of Zhitong Financial APP, the above energy level leapfrog achievements are inseparable from the company's hard power and soft power support for the acquired enterprises.
First of all, in terms of the strategic choice of mergers and acquisitions, the companies that Global Medical chooses to invest in have one thing in common, that is, each company has a high degree of matching with Universal Medical's own resource capabilities, that is, it can achieve a win-win situation in its existing financial and general hospital business resources. The company's management pointed out at the results meeting that the invested companies will not only maintain good performance after joining Global Medical, but also achieve higher quality and faster development in related industries under the common expectations and confidence of both parties.
From the perspective of hard power, in addition to the financial business foundation of listed companies to help the development of the industry, more importantly, based on its existing "medical + finance" business, Global Medical can provide support for the upstream and downstream resources and benefit sharing of the medical and health industry chain. It is understood that in August last year, the merger and acquisition of Kaisi Xuanda (an equipment maintenance company), although it is a top enterprise in the industry, but still faces multiple development bottlenecks such as the supply of spare parts for production enterprises, access to original technical training resources and capital needs for expansion. As a state-owned medical and health group with scale advantages, Universal Medical has significant advantages in terms of financial support, deepening and expansion of manufacturer relationships, and industrial chain resources, which can effectively help Kaisi Xuanda break through the bottleneck of development and improve its core capabilities.
Soft power comes from the experience of post-investment management. In the past four years, the achievements of the reform and development of general hospitals in the global medical system have proved that they have strong integration and leading high-quality development genes in terms of strategic management, cultural consensus and organizational efficiency. According to the management at the performance meeting, after Kaisi Xuanda joined its equipment full-cycle business line, it has formed a two-tier structure of "headquarters competence center" and "industrial company competence center", the management model has been optimized, the operational efficiency has also been improved, and the high-quality development of the invested enterprises has been empowered through multi-pronged management methods such as strategy, finance, human resource management, and digital empowerment. At the same time, the company will also grow together with the invested companies, and generate "1+1>2" or even more value growth while realizing resource sharing, complementary advantages, mutual benefit and win-win results between the two parties.
According to the analysis of Zhitong Financial APP, comparable companies in the same industry can refer to Agiliti, a key service provider in the U.S. healthcare industry, Agiliti has provided medical device management and service solutions for more than eight years to help healthcare providers reduce costs, improve operational efficiency, and support optimal patient outcomes. Agiliti's model is both leasing and equipment maintenance, which is very similar to Global's business, and Agiliti has been valued at 30-50 times PE by the market in the past. It is believed that with the sustained and rapid growth of Global Medical's industrial business in the future, it will also open up the growth boundary and drive the overall valuation of listed companies to increase.
3. Accelerate the overall layout of specialties and industries, and continue to open up the growth boundary
According to the results announcement, in 2023, Global Medical will make varying degrees of progress in various subdivisions of specialties and industries.
In terms of nephrology, relying on the development soil of the hospital group, Universal Medical has built core services of chronic disease management, integration of traditional Chinese and Western medicine, dialysis quality control and access management, and built a 1+N business synergy layout of kidney disease specialty hospitals and hemodialysis centers. Up to now, the company has internally empowered 21 of its subordinate hospitals to promote the management model of the whole course of kidney disease, and achieved revenue of 270 million yuan in the comprehensive medical business segment, an increase of 18.9% over the previous year, and has completed the mergers and acquisitions of Bethis (Chengdu) Nephrology Hospital and Haiyang Senzhikang Hospital (hemodialysis center), and continues to promote the project mergers and acquisitions of other specialized hospitals and hemodialysis centers. It is reported that there will also be relevant layouts in 2024.
In terms of oncology, Global Medical and Maxim Medical Group, an international leader in miniaturized proton diagnosis and treatment equipment, jointly established a tumor precision medicine service company "Global Maxim", to accelerate the construction of a leading tumor precision diagnosis and treatment business system and an intelligent tumor precision diagnosis and treatment service platform in China through the business model of "medical equipment, software + light assets + heavy assets". At present, the revenue scale of oncology in comprehensive medical care is 159 million yuan, an increase of 14.8% over the previous year.
In terms of ophthalmology, Zhitong Financial APP recently found that in April, Global Medical signed a cooperation framework agreement with the People's Government of Huaiyin District of Jinan City and the Management Committee of Jinan International Medical Center, and all parties will jointly promote the opening and operation of the Shierming Optometry Eye Hospital project as soon as possible. In fact, as early as May 2023, Universal Medical has signed a strategic investment agreement in Shierming Optometry and Ophthalmology Hospital affiliated to Shandong University of Traditional Chinese Medicine. Zhitong Financial APP believes that in the future, Global Medical will give full play to the management experience, resource advantages and financial advantages of the central enterprise medical and health group, and build Shierming Optometry and Ophthalmology Hospital into a benchmark hospital of integrated traditional Chinese and Western medicine in China in Jinan International Medical Center, and build it into an optometry highland and regional medical center with a demonstration and leading role, so as to promote the ophthalmology hospital to become stronger, better and bigger.
It is worth mentioning that in the health industry, in addition to the full-cycle business of equipment, the company is also actively expanding the medical digital technology business.
It is reported that the medical digital technology business is divided into two directions, medical digitalization and medical care digitalization. Medical digitalization is to build a smart hospital product system that integrates pre-hospital, in-hospital, post-hospital, online and offline, and forms an independent and controllable digital support capability for operation and management. The digitalization of medical care is to lay out the Internet field of the health care industry and run through the smart home medical care model.
At the beginning of 2024, the company acquired Jade Bird SoftStone, which is an important step in the expansion of medical care digitalization. As a leading enterprise in China's smart and healthy elderly care, Jade Bird has a national business layout covering more than a dozen provinces, serving more than 300 district and county smart elderly care platforms, and accumulating more than 40,000 intelligent home elderly care beds. The company said that in the future, it expects to build a smart medical care service system that integrates home, community and institution with the help of the merger and acquisition of Jade Bird, empower the hospital internally, build a brand externally, and become an independent industrial line that can release greater value under the listed company.
Fourth, the three major sectors are synergistic and resonant, and the combination of industry and finance builds a high business moat
The strategic layout of the coordinated development of the three major sectors is a significant advantage that distinguishes Global Medical from other similar enterprises. It is reported that Global Medical is committed to developing into a medical and health enterprise with financial service capabilities, specialized medical characteristics and differentiated industry-side business advantages, building a 1+N "large listed company platform architecture", and gradually fully releasing the value of its various business segments and assets, and continuing to open up the growth boundary. This is the high-quality development strategy that Global has been firmly implementing, and it is also the value support for building a trustworthy world-class medical and health enterprise.
According to the analysis of Zhitong Financial APP, the three major sectors of global medical care are not independent of each other, but can be organically integrated, leverage each other, and achieve efficient resonance of growth.
As a source of stable growth profits, the financial business is the "ballast stone" of the company's sustainable development, providing a steady stream of cash flow for the comprehensive medical and specialty industries. At present, the global medical financial sector has formed a new pattern with two AAA corporate credit rating entities, and the financial sector can provide great help to specialists and industrial units in terms of capital investment and financial support for mergers and acquisitions, as well as resource sharing and benefit sharing in the upstream and downstream of the industrial chain. In terms of performance, the financial business will achieve revenue of 5.882 billion yuan in 2023, an increase of 2.8%, and a net profit of 1.745 billion yuan, an increase of 2.1%, still maintaining a steady and safe growth.
The goal of the comprehensive medical business is to maintain a benign rolling development, become a model of quality medical care, create a competitive advantage of central enterprises with group management and control and professional improvement, and improve the operating efficiency of state-owned hospitals. On this basis, these general hospitals can also be used as R&D and training centers for specialized medical care, as well as transformation pools for incubation projects, and as basic resources and practice sharing centers for industrial units, helping listed companies to build the second growth curve of the specialty and health industry. In terms of performance, the integrated medical business will achieve revenue of 7.634 billion yuan in 2023, an increase of 20.5%, and a net profit of 421 million yuan, an increase of 14.7%, mainly due to the improvement of the business volume of its own hospitals and the effectiveness of group control.
It is reported that in the future, Global Medical will continue to cultivate and consolidate its core capabilities, continuously gather internal and external advantageous resources, closely combine connotative development with epitaxial expansion, build replicable operational capabilities and influential industry brands in the field of health industry, and promote the high-quality development of central enterprise medical and health groups.
brief summary
With the continuous implementation of the overall development strategy, with the support of multiple advantages such as stable fundamentals and sufficient funds, Universal Medical has successfully built a solid and broad moat for its long-term high-quality development. With the expansion of the company's own business and the implementation of industrial mergers and acquisitions, explosive growth can be expected in the future, and the sustainable and rapid growth of the above industries will also drive the overall valuation of Global Medical and promote the value discovery and revaluation of listed companies.
In addition, while building a model of high-quality development of listed companies in central medical and health enterprises and serving the "Healthy China" strategy, Universal Medical also pays great attention to ESG practices and integrates global sustainable development goals into the company's daily management and operations. In 2023, Global Medical ranked 62nd in the "China ESG Listed Companies Pioneer 100" list, and actively became the first batch of ISSB international sustainable development accounting standard testing partners in China, actively fulfilling social responsibilities with practical actions, and promoting the leapfrog growth of listed companies with leading overall value.
It should be emphasized that the company pays stable dividends all year round, with a dividend rate of 30% and a dividend yield of more than 7%. As the company's high-quality and efficient growth path is further clarified, Global Medical, which has multiple concepts such as "medium and special valuation" and "high-dividend stocks", is expected to enjoy a higher valuation premium with the continuous release of performance. The company's management also revealed at the performance meeting that it will continue to strengthen the management of market value management on the basis of fully promoting the high-quality development of the business, so as to enhance the market recognition and value realization of listed companies.