Core Viewpoint - CICC has downgraded the net profit forecast for China Resources Medical (01515) for 2025/2026 by 16.8%/15.6% to RMB 471 million/RMB 499 million, reflecting a year-on-year change of -16.8%/+6.0% due to the impact of medical insurance settlement adjustments [1] Group 1: Financial Performance - The company's 1H25 performance showed revenue of RMB 4.525 billion, down 9.1% year-on-year, and a net profit of RMB 340 million, down 21.8%, with earnings per share at RMB 0.27, which was below CICC's expectations [2] - The administrative and other operating expense ratio increased to 10.4%, up 0.9 percentage points year-on-year, while the financial expense ratio decreased to 0.6%, down 0.2 percentage points, due to adjustments in the debt structure [5] Group 2: Business Segments - The hospital business's revenue accounted for 94.1% of total revenue, up 1.7 percentage points year-on-year, while the IOT business saw a reduction, with other business revenue at RMB 266 million, down 29.3% [3] - In 1H25, the hospital business generated revenue of RMB 4.259 billion, down 7.4% year-on-year, with outpatient revenue at RMB 1.813 billion, down 4.4%, and inpatient revenue at RMB 2.446 billion, down 9.6% [4] Group 3: Operational Metrics - The company managed 103 medical institutions across 10 provinces and cities in China, with a total of 18,286 operational beds and a bed occupancy rate of 80.57%, compared to 79.93% in 1H24 [3] - The number of outpatient and inpatient visits for self-owned hospitals was 5.1 million and 270,000, respectively, showing a year-on-year increase of 1.0% and a decrease of 3.9% [4]

Core Viewpoint - The company's net profit for 1H25 fell short of expectations, primarily due to adjustments in medical insurance settlements, with a reported revenue of 4.525 billion RMB, down 9.1% year-on-year, and a net profit of 340 million RMB, down 21.8% year-on-year [1][2]. Financial Performance - Revenue for the hospital business in 1H25 was 4.259 billion RMB, a decrease of 7.4% year-on-year, with outpatient revenue at 1.813 billion RMB (down 4.4%) and inpatient revenue at 2.446 billion RMB (down 9.6%) [2]. - The company managed 103 medical institutions across 10 provinces and cities in China, with a total of 18,286 operational hospital beds and a bed occupancy rate of 80.57%, an increase from 79.93% in 1H24 [1]. - The gross profit for the hospital business was 670 million RMB, down 27.4%, with a gross profit margin of 15.7% [2]. Business Segments - The hospital business accounted for 94.1% of total revenue, reflecting a year-on-year increase of 1.7 percentage points [1]. - The IOT business saw a reduction in scale, with other business revenue at 266 million RMB, down 29.3% year-on-year [1]. Cost Management - Administrative and other operating expense ratio increased to 10.4%, up 0.9 percentage points year-on-year, while financial expense ratio decreased to 0.6%, down 0.2 percentage points, due to adjustments in debt structure [2]. Profit Forecast and Valuation - The net profit forecasts for 2025 and 2026 have been revised down by 16.8% and 15.6% to 471 million RMB and 499 million RMB, respectively [3]. - The target price is maintained at 5.0 HKD, corresponding to 12.6 times and 11.7 times the price-to-earnings ratio for 2025 and 2026, with a current stock price reflecting 9.2 times and 8.6 times the price-to-earnings ratio, indicating a potential upside of 37.0% to the target price [3].

Core Insights - The company reported a revenue of RMB 4.525 billion for the first half of 2025, a decrease of 9.07% year-on-year [1] - The profit attributable to the company's owners was RMB 340 million, down 21.76% year-on-year, with earnings per share at RMB 0.27 [1] - The decline in net profit is primarily attributed to a decrease in average medical insurance fees, which affected the operating profits of member medical institutions [1] Financial Performance - The hospital business segment generated revenue of RMB 4.259 billion, a decrease of 7.4% year-on-year [1] - The number of outpatient and emergency visits increased by 1.0% to approximately 5.1 million, while inpatient visits decreased by 3.9% to approximately 270,000 [1] - Average revenue per outpatient and inpatient visit declined by 5.8% due to the decrease in average medical insurance fees [1] - The gross profit for the hospital business segment was RMB 670 million, down 27.4%, with a gross margin of 15.7%, compared to 20.1% in the same period last year [1] - The profit for the hospital business segment was RMB 255 million, a decrease of 51.1% year-on-year [1] Other Business Segments - Other business revenue was RMB 266 million, a decrease of 29.3% year-on-year, while segment profit increased by 96.9% to RMB 292 million [2] - After excluding a one-time management fee and compensation of approximately RMB 210 million from the Yanhua IOT agreement, the segment profit was RMB 86 million, down 42.1% year-on-year [2] - The reduction in IOT business scale contributed to the decline in profit contribution during the reporting period [2]

Core Viewpoint - China Resources Medical (01515) reported a decline in both revenue and net profit for the six months ending June 30, 2025, indicating challenges in the healthcare sector, particularly in hospital operations [1] Financial Performance - Revenue for the period was 4.525 billion RMB, a decrease of 9.07% year-on-year [1] - Net profit attributable to shareholders was 340 million RMB, down 21.76% compared to the previous year [1] - Basic earnings per share were 0.27 RMB, with an interim dividend proposed at 0.05 RMB per share [1] Business Segment Analysis - The hospital business segment generated revenue of 4.259 billion RMB, reflecting a 7.4% decline year-on-year [1] - Outpatient and emergency visits increased by 1.0%, while inpatient visits decreased by 3.9% [1] - Average revenue per outpatient and inpatient visit declined by 5.8% due to a decrease in average medical insurance costs [1] Operational Metrics - As of June 30, 2025, the group managed and operated 103 medical institutions across 10 provinces and cities in China [1] - The total outpatient visits and inpatient admissions for the group were approximately 5.1 million and 270,000, respectively, showing a 1.0% increase and a 3.9% decrease year-on-year [1]