BUY Q^V´LÂô è8?1 ¼VÌ)¿ U nchanged CHINA RESOURCES …img3.gelonghui.com/pdf201803/pdf20180323134904138.pdfAnalyst Jill Wu A0230514080002 AXT645 [email protected] (+86) 21

Pharmaceuticals, Biotechnology & Life | Company Bringing China to the World

SWS Research Co. Ltd 99 East Nanjing Road, Shanghai | +86 21 2329 7818 www.swsresearch.com

23 March 2018

BUY Unchanged

经营稳健，新并购落地 CHINA RESOURCES PHOENIX HEALTHCARE (1515:HK)

Market Data: March, 22

Closing Price (HK$) 9.70

Price Target (HK$) 13.00

HSCEI 12,428

HSCCI 4,516

52-week High/Low (HK$) 12.40/8.88

Market Cap (US$m) 1,602

Market Cap (HK$m) 12,578

Shares Outstanding (m) 1,297

Exchange Rate (Rmb-HK$) 1.24

Price Performance Chart:

Source: Bloomberg

Analyst

Jill Wu

A0230514080002

AXT645

[email protected]

(+86) 21 2329 7269

Financial summary and valuation 2016 2017 2018E 2019E 2020E

Revenue (Rmbm) 1,532.83 1,877.72 1,726.83 2,005.41 2,329.95 YoY (%) 11.70 22.50 (8.04) 16.13 16.18 Net income (Rmbm) (1,506.96) 421.03 363.67 465.88 590.99 YoY (%) - - (13.62) 28.10 26.86 EPS (Rmb) (1.67) 0.33 0.28 0.36 0.46 Diluted EPS (Rmb) (1.67) 0.33 0.28 0.36 0.46 ROE (%) (43.14) 7.86 6.48 7.90 9.43 Debt/asset (%) 16.92 18.98 22.40 30.58 36.30 Dividend Yield (%) 0.47 0.74 0.70 0.90 1.14 PE (x) - 23.84 28.01 21.87 17.24 PB (x) 3.45 1.32 1.79 1.74 1.64 EV/Ebitda (x) 26.70 16.70 19.62 16.78 14.26 Note: Diluted EPS is calculated as if all outstanding convertible securities, such as convertible preferred shares, convertible

debentures, stock options and warrants, were exercised.

华润凤凰医疗 17 年净利润为 4.21 亿元，核心净利润为 3.79 亿元，同比增长 51%，略低于

我们 4.01 亿元核心净利润预期。此外，假设并购的华润健康的医院于 16 年初开始贡献利

润，2017 年公司经营利润的内生增速为 24%，达到 6.09 亿元。

经营稳健，对抗政策影响。尽管国内大多数地区已经执行“两票制”和“零加成”政策，

2017 年，公司旗下医院的收入仍实现了 7.1%的同比增长。2017 年公司整体门诊人次和住院

人次分别同比增长 3.2%和 4.1%，意味着次均收入提升约 3-4 个百分点。

利润率改善空间大。按照医院收入口径，盈利性医院（主要为健宫医院）约占公司整体医院

收入的 10%，拥有举办权的医院（即并购的华润健康的医院）约占整体医院收入的 42%，而

IOT 医院约占 48%。此外，盈利性医院、拥有举办权的医院以及 IOT 医院的的经营利润率分

别为 17.1%、5.4%和 11.9%。拥有举办权的医院目前经营利润率较低。然而，我们相信，随

着公司对于这些医院的供应链进行持续整合，拥有举办权的医院的盈利能力将会得到显著改

善。例如，公司自 17 年下半年开始对武钢医院的供应链业务进行整合，我们预期该医院 18

年的利润贡献将将显著提升。

强化对北京地区其他医院的控制力。除燕化医院之外，公司对于北京地区其他主要医院的控

制力有所加强。近期，华润集团、华润凤凰医疗、京能集团（即京煤医院的举办人）以及北

京建工集团（持有健宫医院 20%的股权）的管理层进行了会面，商讨深入合作，共同加强医

院管理与建设。

加快医院网络扩张。3 月 22 日，公司宣布获得泰安医院 20 年的 IOT 权利，未来计划将泰安

医院建设成为一家以脑科和心血管科为特色的二级综合医院。此外，华润凤凰医疗享有华润

集团的背书，我们认为公司有望实现医院网络的快速扩张。公司管理层目标于 2020 年之

前，实现总运营床位数翻番，从目前的约 1.2 万张扩张至 2.4 万张。

维持买入评级。假设燕化医院自 18 年初开始不再贡献利润，我们将 2018 年的稀释每股收益

从 0.30 元下调至 0.28 元（同比下滑 15%），2019 年的稀释每股收益从 0.39 元下调至 0.36

元（同比增长 29%），预计 2020 年的稀释每股收益为 0.46 元（同比增长 28%）。我们维

持目标价 13.0 港币，对应 29 倍 19 年市盈率。目标价对应 34%的上涨空间，维持买入评

级。

Related Reports "Risk factor–CHINA RESOURCES PHOENIX HEALTHCARE (1515:HK)" March 1, 2018

"Hospital discharge–CHINA RESOURCES PHOENIX HEALTHCARE (1515:HK)" January 29, 2018

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CR Phoenix

Hang Seng China Ent Index

October 12, 2010 Building Materials | Company Research

Please refer to the last page for important disclosures Page 1

January 12,2015 Food, Beverage & Tobacco | Company Research

23 March 2018 Pharmaceuticals, Biotechnology & Life | Company Research

Investment Highlights:

China Resources Phoenix Healthcare reported 2017 net profit of Rmb421m and recurring net profit of Rmb379m (+51% YoY), slightly below our expectation of Rmb401m. Assuming full-year contribution from the injected assets from CR Healthcare in 16A, the firm’s organic operating income would have increased 24% YoY to Rmb609m in 2017. We exclude profit contribution from Yan Hua Hospital from 18E, and lower our diluted EPS forecasts from Rmb0.30 to Rmb0.28 in 18E (-15% YoY) and from Rmb0.39 to Rmb0.36 in 19E (+29% YoY), while forecasting Rmb0.46 in 20E (+28% YoY). We maintain our target price of HK$13.00 (29x 19E PE). With 34% upside, we maintain BUY.

Robust business. Despite the implementation of the “two-invoice scheme” and “zero-markup policy” in most regions in China, CR Phoenix’s managed hospitals still delivered 7.1% YoY increase in hospital revenue in 17A. Outpatient visits grew 3.2% YoY while inpatient visits rose 4.1% YoY in 17A, indicating 3-4ppt improvement in revenue per patient visit over the same period.

Margin upside. For-profit hospitals (mainly Jiangong Hospital) accounted for 10% of total hospital revenue, vs 42% for sponsored hospitals (ie, hospitals acquired from CR Healthcare) and 48% for Invest-Operate-Transfer (IOT) hospitals. Meanwhile, operating profit margin of profit hospitals reached 17.1%, while that of sponsored hospitals amounted to 5.4% and that of IOT hospitals came to 11.9%. We see large margin upside for sponsored hospitals as the company gradually integrates the supply chain of these hospitals. The firm started to consolidate the supply chain of Wugang Hospital in 2H17, indicating significant incremental contribution from the hospital in 18E.

Strengthened control over other hospitals in Beijing. We notice that the management of CR Group, CR Phoenix, Power Beijing Group (the sponsor of Jingmei Hospital), and Beijing Construction Engineering Group (which holds a 20% stake in Jiangong Hospital) have recently met to discuss strengthened cooperation.

Accelerating hospital network expansion. CR Phoenix announced that it won 20-year IOT rights for Tai’an Hospital. The company will develop the hospital as a grade-II general hospital featuring neurology and cardiology. Moreover, with support from central state-owned enterprise CR Group, we expect CR Phoenix to expand its hospital network nationwide rapidly. Management expects its total number of operating beds to double from c.12,000 to c.24,000 by 2020E.

Maintain BUY. We exclude profit contribution from Yan Hua Hospital from 18E, and lower our diluted EPS forecasts from Rmb0.30 to Rmb0.28 in 18E (-15% YoY) and from Rmb0.39 to Rmb0.36 in 19E (+29% YoY), while forecasting Rmb0.46 in 20E (+28% YoY). We maintain our target price of HK$13.00 (29x 19E PE). With 34% upside, we maintain BUY.





Appendix Consolidated Income Statement

Consolidated Cash Flow Statement

Rmbm 2016 2017 2018E 2019E 2020E

Profit before taxation (1,452) 560 495 634 804

Plus：Depr. and amortisation 51 67 63 64 65

Finance cost 0 2 11 32 62

Losses from investments (36) (60) (60) (60) (60)

Change in working capital (36) (20) 89 (4) (4)

Others 1,696 (152) (124) (158) (201)

CF from operating activities 224 397 474 507 666

Capex (42) (50) (50) (50) (50)

Other CF from investing activities 163 (540) (940) (1,540) (1,540)

CF from investing activities 120 (590) (990) (1,590) (1,590)

Equity financing 0 0 0 0 0

Net change in liabilities 0 120 400 1,000 1,000

Dividend and interest paid (83) (116) (120) (172) (239)

Other CF from financing activities (15) 0 0 0 0

CF from financing activities (99) 4 280 828 761

Net cash flow 246 (189) (237) (254) (163)

FCFF 211 323 424 457 616

FCFE 210 441 813 1,425 1,554

Source: Company data, SWS Research

Rmbm 2016 2017 2018E 2019E 2020E

Revenue 1,533 1,878 1,727 2,005 2,330

Cost of Sales (1,126) (1,209) (1,086) (1,185) (1,288)

Gross Profit 407 668 641 821 1,042

Other Income 93 60 60 60 60

Selling/General/Admi. Expenses (172) (212) (195) (215) (235)

Ebitda 336 523 509 670 871

Ebit 285 457 446 606 806

Finance Costs (0) (2) (11) (32) (62)

Profit before tax (1,452) 560 495 634 804

Income tax expense (47) (130) (124) (158) (201)

Minority interests (7) (9) (7) (10) (12)

Profit for the year (1,507) 421 364 466 591






Consolidated Balance Sheet

Rmbm 2016 2017 2018E 2019E 2020E

Current Assets 1,654 2,114 1,168 956 841

Bank balances and cash 1,069 877 641 386 223

Trade and other receivables 299 394 279 317 361

Inventories 50 39 45 49 53

Other current assets 235 804 204 204 204

Long-term investment 677 529 529 529 529

PP&E 264 257 265 272 278

Intangible and other assets 3,853 4,015 5,594 7,173 8,752

Total Assets 6,448 6,914 7,556 8,930 10,400

Current Liabilities 752 977 1,356 2,394 3,439

Borrowings 0 171 571 1,571 2,571

Trade and other payables 363 447 426 464 509

Other current liabilities 389 359 359 359 359

Long-term liabilities 338 336 336 336 336

Total Liabilities 1,091 1,313 1,692 2,730 3,775

Minority Interests 119 120 127 137 149

Shareholder Equity 5,238 5,482 5,736 6,062 6,476

Share Capital 0 0 0 0 0

Reserves (1,128) (815) (560) (234) 180

Total Equity 5,358 5,602 5,864 6,199 6,625

Total Liabilities and equity 6,448 6,914 7,556 8,930 10,400






Key Financial Ratios 2016 2017 2018E 2019E 2020E

Ratios per share (Rmb)

Earnings per share (1.67) 0.33 0.28 0.36 0.46

Diluted EPS (1.67) 0.33 0.28 0.36 0.46

Operating CF per share 0.25 0.31 0.37 0.39 0.51

Dividend per share 0.06 0.09 0.08 0.11 0.14

Net assets per share 5.94 4.38 4.52 4.78 5.11

Key Operating Ratios (%)

ROIC 4.52 6.72 5.89 6.63 7.45

ROE (43.14) 7.86 6.48 7.90 9.43

Gross profit margin 26.53 35.59 37.13 40.92 44.71

Ebitda Margin 21.92 27.87 29.46 33.41 37.40

Ebit Margin 18.59 24.32 25.83 30.22 34.61

Growth rate of Revenue(YoY) 11.70 22.50 (8.04) 16.13 16.18

Growth rate of Profit(YoY) - - (13.62) 28.10 26.86

Debt-to-asset ratio 16.92 18.98 22.40 30.58 36.30

Turnover rate of net assets 0.29 0.34 0.29 0.32 0.35

Turnover rate of total assets 0.24 0.27 0.23 0.22 0.22

Effective tax rate (%) (3.26) 23.20 25.00 25.00 25.00

Dividend yield (%) 0.47 0.74 0.70 0.90 1.14

Valuation Ratios (x)

PE - 23.84 28.01 21.87 17.24

PB 3.45 1.32 1.79 1.74 1.64

EV/Sale 5.85 4.65 5.78 5.61 5.33






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Documents

BUY Q^V´LÂô è8?1 ¼VÌ)¿ U nchanged CHINA RESOURCES …img3.gelonghui.com/pdf201803/pdf20180323134904138.pdfAnalyst Jill Wu A0230514080002 AXT645 [email protected] (+86) 21