新世纪医疗(01518) - 2024 - 中期财报

Company Information The report lists the company's core management, board members, and their committee appointments - The report lists the company's core management, board members, and their committee appointments, including Executive Directors Chairman and CEO Mr. Jason ZHOU, Senior Vice President and COO Ms. Xin HONG, and Senior Vice President and CFO Mr. Xu HAN[21] - The company's primary bank is Bank of China Beijing Financial Street Branch, and its auditor is PricewaterhouseCoopers[23] Management Discussion and Analysis Business Overview In H1 2024, the Group's total revenue was RMB 416.0 million, largely flat year-on-year; medical services revenue slightly increased by 0.2% to RMB 412.1 million, with pediatric services growing 0.9% to RMB 361.0 million, while obstetrics and gynecology revenue decreased by 3.9%; profit attributable to owners increased to RMB 25.2 million due to effective cost control and reduced impairment losses on financial assets 2024 H1 Key Performance Indicators | Metric | 2024 H1 | YoY Change | | :--- | :--- | :--- | | Total Revenue | RMB 416.0 million | Largely Flat | | Medical Services Revenue | RMB 412.1 million | +0.2% | | Pediatric Services Revenue | RMB 361.0 million | +0.9% | | Obstetrics & Gynecology Services Revenue | RMB 51.1 million | -3.9% | | Profit Attributable to Owners | RMB 25.2 million | +9.1% | 2024 H1 Operating Data by Business Segment | Business Segment | Service Type | Visits | YoY Change | Revenue (RMB) | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Pediatrics | Outpatient | 118,392 | -8.4% | RMB 217.5 million | -2.4% | | | Inpatient | 3,622 | +5.1% | RMB 121.3 million | +9.1% | | Obstetrics & Gynecology | Outpatient | 22,736 | -9.9% | RMB 27.1 million | -3.9% | | | Inpatient | 807 | -7.5% | RMB 24.0 million | -4.0% | - Pediatric internal medicine outpatient and inpatient services were primary revenue growth drivers due to strong demand, with contributions also from ENT, hematology, medical aesthetics, ophthalmology, and traditional Chinese medicine specialties[25] - Combined revenue from members and commercial insurance approached 70% of pediatric services revenue, indicating a strong customer base with high purchasing power[25] Industry Outlook and Group Strategy Facing national emphasis on women's and children's health and opportunities/challenges from DRG/DIP payment reforms, the Group will deepen its development strategy by strengthening cooperation with high-end commercial insurers, securing quality medical experts, upgrading customer and member services, focusing on sub-specialty development, and expanding market-oriented consumer medical services like pediatric ophthalmology, healthcare, endocrinology, and dentistry - National policies like the "Outline for Women's/Children's Development in China" and DRG/DIP payment reforms present growth opportunities for high-end private medical institutions, attracting customers seeking quality services and commercial insurance[27] - Group's H2 strategic priorities: - Market Expansion: Strengthen brand promotion among high-end commercial insurers - Talent Acquisition: Increase quality medical expert resources - Customer Relationship: Upgrade customer management systems, improve member base and service reach - Business Deepening: Focus on sub-specialty construction, build customer-centric product service chains - Service Expansion: Expand into pediatric ophthalmology, healthcare, and dentistry consumer medical services[27] Financial Review In H1 2024, the Group's total revenue was RMB 416.0 million, largely flat, with medical services revenue accounting for 99.1% and a slight 0.2% increase; gross profit was RMB 168.7 million, a 0.6% decrease, with gross margin at 40.6%; effective cost control led to a 0.6% decrease in selling expenses and a 4.3% decrease in administrative expenses; profit for the period increased to RMB 48.3 million, mainly due to higher profit and increased income tax expense from deferred tax asset reversal Segment Revenue and Operating Data Medical services are the Group's core revenue source, accounting for 99.1% of total revenue, with pediatric services contributing 86.8% and obstetrics and gynecology 12.3%; inpatient services revenue grew 6.7% to RMB 145.0 million, driven by pediatric inpatient business, while outpatient services revenue decreased 2.6% to RMB 245.0 million Revenue Composition (For the Six Months Ended June 30) | Business Segment | 2024 Revenue (RMB Thousand) | % of Total Revenue | 2023 Revenue (RMB Thousand) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Pediatric Services | 360,956 | 86.8% | 357,860 | 86.0% | | Obstetrics & Gynecology Services | 51,093 | 12.3% | 53,217 | 12.8% | | Total Medical Services | 412,049 | 99.1% | 411,077 | 98.8% | Group Overall Operating Data (For the Six Months Ended June 30) | Service Type | Metric | 2024 | 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Inpatient Services | Visits | 4,429 | 4,318 | +2.6% | | | Average Spend (RMB) | 32,803 | 31,536 | +4.0% | | | Revenue (RMB Thousand) | 145,285 | 136,174 | +6.7% | | Outpatient Services | Visits | 141,128 | 154,487 | -8.6% | | | Average Spend (RMB) | 1,733 | 1,625 | +6.6% | | | Revenue (RMB Thousand) | 244,616 | 251,045 | -2.6% | Costs, Expenses, and Profit During the reporting period, gross profit was RMB 168.7 million, a slight 0.6% decrease, with a gross margin of 40.6%; effective cost control led to year-on-year decreases in both selling and administrative expenses, with administrative expenses down 4.3% to RMB 60.8 million; R&D expenses decreased by 29.0% due to reduced activities; profit for the period increased to RMB 48.3 million from RMB 44.1 million in the prior year Key Expense Items (For the Six Months Ended June 30) | Item | 2024 (RMB Million) | 2023 (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | | Selling Expenses | 32.8 | 33.0 | -0.6% | | Administrative Expenses | 60.8 | 63.5 | -4.3% | | R&D Expenses | 2.2 | 3.1 | -29.0% | | Income Tax Expense | 23.9 | 19.6 | +21.9% | - The decrease in administrative expenses was primarily due to the company's continuous measures to reduce expenditures and improve operational efficiency[37] - Income tax expense increased by 21.9% year-on-year, mainly due to increased Group profit and the reversal of deferred tax assets from pre-tax profits realized by related companies[42] Financial Position As of June 30, 2024, the company's financial position was robust; inventory decreased by 11.7% due to enhanced management and reduced usage; trade receivables remained stable; trade payables decreased by 18.3% due to reduced purchases; cash and cash equivalents were ample, increasing 9.1% to RMB 332.0 million Key Balance Sheet Item Changes | Item | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | Change | | :--- | :--- | :--- | :--- | | Inventories | 19.7 | 22.3 | -11.7% | | Trade Receivables | 51.6 | 51.3 | +0.6% | | Trade Payables | 33.4 | 40.9 | -18.3% | | Cash and Cash Equivalents | 332.0 | 304.3 | +9.1% | Liquidity, Capital Resources, and Risks As of June 30, 2024, the Group had no bank borrowings, rendering the debt-to-asset ratio inapplicable, indicating a healthy financial position; capital expenditure significantly increased by 224.0% to RMB 8.1 million, primarily for property, plant, and equipment to support business development; the company faces foreign exchange fluctuation risk between RMB, USD, and HKD but does not use derivatives for hedging; no significant investments, acquisitions, or disposals occurred during the period - As of June 30, 2024, the company had no borrowings, thus the debt-to-asset ratio is not applicable[45][48] - Capital expenditure was RMB 8.1 million, a 224.0% year-on-year increase, primarily for the purchase of property, plant, and equipment to support business development[45] - The Group primarily operates in China with most transactions settled in RMB, but some cash and dividends payable are denominated in USD or HKD, posing certain foreign exchange fluctuation risks[45] Employees and Dividends As of June 30, 2024, the Group had 1,258 employees, with total staff costs of RMB 172.2 million for the first half; the company has a restricted share award scheme and an employee share scheme to incentivize core employees; the Board decided not to declare an interim dividend for the six months ended June 30, 2024 - As of June 30, 2024, the Group had 1,258 employees, with total staff costs of RMB 172.2 million for the first half of the year[49] - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024[49] Other Information Directors, Chief Executives, and Major Shareholders' Interests The report discloses the shareholdings of directors, chief executives, and major shareholders; Chairman Mr. Jason ZHOU holds approximately 44.40% interest through controlled corporations and acting-in-concert agreements; other major shareholders include Victor Gains Limited (11.8%), Anyi Hekang (Tianjin) Investment Partnership (6.4%), and China Life Reinsurance Company Ltd. (6.4%) Directors' and Chief Executives' Shareholding (As of June 30, 2024) | Name | Capacity | Number of Shares | Percentage | | :--- | :--- | :--- | :--- | | Mr. Jason ZHOU | Interest in controlled corporation; jointly held | 217,556,394 | 44.40% | | Ms. Xin HONG | Beneficial owner | 180,000 | 0.04% | | Mr. Xu HAN | Beneficial owner | 180,000 | 0.04% | Major Shareholders' Shareholding (As of June 30, 2024) | Shareholder Name | Capacity | Number of Shares | Percentage | | :--- | :--- | :--- | :--- | | JoeCare | Beneficial owner | 150,817,051 | 30.8% | | Victor Gains Limited | Beneficial owner | 57,740,181 | 11.8% | | Anyi Hekang (Tianjin) Investment Partnership | Beneficial owner | 31,562,713 | 6.4% | | China Life Reinsurance Company Ltd. | Beneficial owner | 31,444,000 | 6.4% | Share Award Schemes The company has a restricted share award scheme and an employee share scheme; as of June 30, 2024, 4,767,000 shares were available for grant under the restricted share award scheme, with no new grants or vesting during the period; under the employee share scheme, the trustee purchased 2,073,500 shares from the market but has not yet granted any to participants - As of June 30, 2024, 4,767,000 shares were available for grant under the restricted share award scheme, with no changes during the reporting period[56] - Under the employee share scheme, the trustee has purchased and holds 2,073,500 shares, but no awards have been granted yet[58] Use of Proceeds from Initial Public Offering The company disclosed the progress of using IPO proceeds; as of June 30, 2024, HKD 54.0 million remained unutilized, primarily for establishing, renovating, and acquiring new hospitals and clinics, with the remaining amount expected to be fully utilized by the end of 2024 IPO Proceeds Utilization Progress (As of June 30, 2024) | Item | Unutilized as of End of 2023 (HKD Million) | Utilized in H1 2024 (HKD Million) | Unutilized as of Mid-2024 (HKD Million) | Expected Utilization Time | | :--- | :--- | :--- | :--- | :--- | | Establishment, Renovation, and Acquisition of New Hospitals and Clinics | 66.5 | 12.5 | 54.0 | By end of 2024 | Corporate Governance The company is committed to maintaining high corporate governance standards and has applied relevant Listing Rules codes; during the reporting period, all applicable code provisions were complied with, except for the non-separation of Chairman and CEO roles, both held by Mr. Jason ZHOU; the Board believes this arrangement benefits the Group's business prospects and decision-making efficiency; the Audit Committee has reviewed this interim results report - The company complied with the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are not separated, both held by Mr. Jason ZHOU[62] - The Board believes that combining the roles of Chairman and CEO facilitates consistent leadership and promotes more effective and efficient strategic planning and decision-making[62] - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2024, and this interim report[65] Interim Financial Information Review Report on Interim Financial Information PricewaterhouseCoopers, the auditor, has reviewed the Group's interim financial information in accordance with Hong Kong Standard on Review Engagements 2410; the review concluded that nothing has come to their attention that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" - PricewaterhouseCoopers, the auditor, has reviewed this interim financial information[67][69] - The review concluded that nothing indicates the interim financial information was not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[69] Interim Condensed Consolidated Financial Statements This section includes the unaudited interim condensed consolidated statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows for the six months ended June 30, 2024, detailing the Group's financial position, operating results, and cash flow Summary Statement of Financial Position (June 30, 2024) | Item | Amount (RMB Thousand) | | :--- | :--- | | Total Assets | 933,686 | | Total Liabilities | 450,226 | | Total Equity | 483,460 | Summary Statement of Comprehensive Income (For the Six Months Ended June 30, 2024) | Item | Amount (RMB Thousand) | | :--- | :--- | | Revenue | 415,956 | | Operating Profit | 72,363 | | Profit for the Interim Period | 48,307 | | Profit Attributable to Owners of the Company | 25,193 | | Basic and Diluted Earnings Per Share (RMB) | 0.05 | Summary Statement of Cash Flows (For the Six Months Ended June 30, 2024) | Item | Amount (RMB Thousand) | | :--- | :--- | | Net Cash Generated from Operating Activities | 64,776 | | Net Cash Used in Investing Activities | (8,130) | | Net Cash Used in Financing Activities | (29,169) | | Net Increase in Cash and Cash Equivalents | 27,477 | Notes to the Interim Condensed Consolidated Financial Information Notes to the financial statements provide detailed explanations and supplementary information, with segment data indicating pediatric services as the primary profit source; the intangible assets note discloses a goodwill impairment assessment for the Beijing obstetrics and gynecology segment, concluding no impairment is needed; related party transactions detail dealings and balances with companies controlled by or significantly influenced by controlling and major shareholders, including significant impairment provisions for certain related party receivables Note 4: Segment Information The Group is segmented into pediatric services, obstetrics and gynecology services, and other operating segments; in H1 2024, the pediatric segment achieved a segment result (pre-tax profit) of RMB 95.1 million, being the Group's primary profit contributor, while the obstetrics and gynecology segment recorded a loss of RMB 15.7 million Segment Results (For the Six Months Ended June 30, 2024) | Segment | Total Revenue (RMB Thousand) | Segment Result (RMB Thousand) | | :--- | :--- | :--- | | Pediatrics | 360,956 | 95,127 | | Obstetrics & Gynecology | 51,093 | (15,698) | | Others | 19,275 | (6,161) | Note 7: Intangible Assets As of June 30, 2024, the net book value of intangible assets was RMB 240.0 million, primarily comprising medical licenses and goodwill; during the reporting period, due to the underperformance of the Beijing obstetrics and gynecology segment, the company conducted a goodwill impairment assessment; the assessment concluded that the recoverable amount of this cash-generating unit exceeded its carrying amount, thus no impairment loss was recognized - A goodwill impairment assessment was conducted for the Beijing obstetrics and gynecology cash-generating unit, concluding that the carrying amount did not exceed the recoverable amount, thus no impairment loss was recognized[93] Notes 9 and 15: Related Party Balances and Transactions The report discloses transactions and balances with several related parties; specifically, impairment provisions of RMB 114.0 million and RMB 27.4 million were made for receivables from related parties Jiahua Likang and Bairui Kangchen, respectively, due to long-term arrears and credit impairment; major related party transactions include purchasing testing services from Beijing Children's Hospital affiliated with Capital Medical University and leasing premises from Chengdu Women's and Children's Central Hospital - As of June 30, 2024, total receivables from related parties amounted to RMB 170.0 million, with impairment provisions of RMB 143.0 million recognized[96] - Due to long-term arrears and stalled collection from Jiahua Likang, an impairment provision of RMB 114.0 million was made for its receivables; an impairment provision of RMB 27.4 million was made for Bairui Kangchen's receivables due to credit impairment[97]