CICC Maintains Outperform Rating on CR Medical (01515) with Target Price of HK$5.0

Stock News
Sep 01

CICC released a research report stating that considering the impact of medical insurance settlement adjustments, it has lowered CR Medical's (01515) net profit forecasts for 2025/2026 by 16.8%/15.6% to RMB471 million/RMB499 million, representing year-on-year changes of -16.8%/+6.0% respectively. The firm maintains its Outperform rating, and considering the company's strengthened refined medical insurance management and advancement of key hospital specialty construction, maintains its target price of HK$5.0, corresponding to 12.6x/11.7x P/E ratios for 2025/2026. The current stock price corresponds to 9.2x/8.6x P/E ratios for 2025/2026, with 37.0% upside to the target price.

CICC's main viewpoints are as follows:

**1H25 Net Profit Below Expectations**

The company announced 1H25 results: revenue of RMB4.525 billion, down 9.1% year-on-year; attributable net profit of RMB340 million, down 21.8% year-on-year, corresponding to earnings per share of RMB0.27. Net profit was below expectations, mainly due to the impact of medical insurance settlement adjustments.

**Hospital Business Proportion Increases, IOT Business Contracts**

According to company announcements, as of June 30, 2025, the company manages and operates 103 medical institutions across 10 provinces and cities in China (13 tertiary hospitals, 22 secondary hospitals). In 1H25, the company's self-owned hospitals operated a total of 18,286 beds with a bed utilization rate of 80.57% (vs 79.93% in 1H24); hospital business revenue accounted for 94.1%, up 1.7 percentage points year-on-year.

Additionally, in 1H25, the company's IOT business scale contracted, with other business revenue of RMB266 million, down 29.3% year-on-year, and segment profit of RMB292 million, up 96.9% year-on-year. After excluding the one-time management fee and supply chain loss compensation of approximately RMB210 million received under the Yanhua IOT agreement, segment profit was RMB86 million, down 42.1% year-on-year.

**Hospital Business: Steady Growth in Outpatient and Emergency Visits in 1H25**

According to company announcements, in 1H25, the company's hospital business revenue was RMB4.259 billion, down 7.4% year-on-year; of which, outpatient and emergency business revenue was RMB1.813 billion, down 4.4% year-on-year; inpatient business revenue was RMB2.446 billion, down 9.6% year-on-year. The company's self-owned hospitals recorded 5.1 million outpatient and emergency visits and 270,000 inpatient admissions, representing year-on-year growth of 1.0% and decline of 3.9% respectively. Due to decreased medical insurance average cost per visit, both outpatient/emergency and inpatient average revenue per visit declined by 5.8%.

In 1H25, hospital business gross profit was RMB670 million, down 27.4% year-on-year; hospital business gross profit margin was 15.7%; hospital business segment profit was RMB255 million, down 51.1% year-on-year. The company mitigated the impact of declining average revenue per visit on hospital business profit through quality improvement and efficiency enhancement.

The firm believes the company is expected to drive continued development of hospital business by strengthening its comprehensive medical foundation and actively cultivating specialty departments.

**Administrative and Other Operating Expense Ratio Increases, Financial Expense Ratio Decreases**

According to company announcements, in 1H25, the company's administrative and other operating expense ratio was 10.4%, up 0.9 percentage points year-on-year; financial expense ratio was 0.6%, down 0.2 percentage points year-on-year, mainly due to the company's active adjustment of debt structure, with both interest-bearing debt scale and weighted average financing cost declining.

The firm believes the company has achieved effectiveness in cost reduction and efficiency improvement, and maintains a robust financial structure through continuous optimization of capital structure.

**Risk Warnings:** Self-owned hospital operations below expectations, goodwill or asset disposal impairment, medical insurance cost control and price reduction risks.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10