Investment Rating - The investment rating for YunKang Group (2325.HK) is "Buy" with a target price of HKD 13.1, representing a potential upside of 18% from the current price of HKD 11.1 [4][9]. Core Insights - The company's 2023 performance was significantly impacted by the clearance of COVID-19 testing demand, which previously accounted for approximately 80% of its revenue in 2022. The revenue for 2023 decreased by 76% year-on-year to RMB 0.89 billion, with core business segments also experiencing substantial declines [2][3]. - Despite the short-term challenges, the long-term growth potential in the industry remains strong, particularly due to the low penetration rate of ICL (In Vitro Diagnostic) in China, which is currently in the single digits compared to 35% in the US and 60% in Japan [2][3]. - The company implemented cost control measures, resulting in a slight increase in gross margin to 36.5% despite the revenue decline. The net loss attributable to shareholders for 2023 was RMB 0.1 billion, which is lower than the previously forecasted range [2][3]. Financial Performance Summary - In 2023, the company's revenue was RMB 891.5 million, a decrease of 76.3% compared to 2022. The core business segments saw declines of 79%, 74%, and 64% in revenue from diagnostic outsourcing, testing services for medical alliances, and diagnostic services for non-medical institutions, respectively [3][6]. - The company reported a net loss of RMB 102.3 million in 2023, compared to a profit of RMB 377.3 million in 2022. The forecast for 2024-2026 anticipates revenues of RMB 0.98 billion, RMB 1.09 billion, and RMB 1.24 billion, respectively, with expected growth rates of 9.5%, 11.3%, and 13.9% [3][6]. - The company has a significant amount of accounts receivable, totaling RMB 1.5 billion as of the end of 2023, with a large portion related to COVID-19 testing. The company expects the risk of further impairment to be manageable due to the concentration of these receivables in financially stable regions [2][3]. Market Outlook - The report indicates that the ICL industry is facing increased competition, with major players experiencing significant profit declines in 2023. However, the long-term outlook remains positive due to the low penetration rates in China and the potential for growth in the sector [2][3]. - The target price adjustment to HKD 13.1 is based on a DCF valuation method, with a WACC of 10.0% and a perpetual growth rate of 2.0% [2][4].
因新冠检测出清及应收款减值承压，常规检测收入同比+27%