Investment Rating - The report assigns a Neutral rating to Aier Eye Hospital with a 12-month target price of Rmb14, indicating a potential upside of 12.9% from the current price of Rmb12.4 [10][8]. Core Insights - Aier Eye Hospital is experiencing improvements in refractive surgery pricing due to new technologies, with a forecast of double-digit revenue growth for 2025 [2][7]. - The company anticipates a recovery in cataract surgery revenue growth to double digits in the second half of 2025, following price cuts of approximately 8-10% since the second half of 2024 [9][7]. - The overall ophthalmology market in China is expected to grow at a 12% CAGR from 2020 to 2030, driven by increased service upgrades and market penetration [7]. Summary by Sections Recent Trends - Growth in refractive surgeries slowed in April and May after a busy first quarter, but June showed improvement due to an increase in average selling prices (ASP) from new technologies [3]. - Cataract surgeries faced volume declines due to tightening reimbursement policies, while optometry performance remained moderate [3]. Refractive Surgery Pricing - New technologies such as SMILE 4.0 and SMILE pro have been launched, with SMILE 4.0 contributing 12% of refractive surgery revenue in Q1 2025 [3][6]. - The ASP for SMILE 4.0 is around Rmb18,800, with approximately 100 installations [3]. Cataract Surgery Outlook - The company expects cataract surgery revenue growth to recover to double digits in H2 2025, as the lower prices from H2 2024 are now reflected [9]. - Premium cataract surgeries accounted for 45%-50% of total cataract surgeries as of Q1 2025, with 15% of revenue coming from femtosecond laser-assisted surgeries [9]. Optometry Services - Recent pricing pressure on OK lenses was noted, particularly after public hospitals in Beijing reduced prices by 50% [9]. - The annualized cost for OK lenses is around Rmb10,000, while defocal lenses cost only Rmb2,000 to Rmb3,000 [9]. Overseas Expansion - Aier Eye Hospital is focusing on expanding its presence in South America [9].

Summary of Aier Eye Hospital Conference Call Company Overview - **Company**: Aier Eye Hospital - **Industry**: Healthcare Providers, specifically focused on ophthalmology - **Market Cap**: Rmb116 billion (approximately US$16.1 billion) as of May 30, 2025 [5][32] Key Points 2025 Targets and Strategy - Aier Eye Hospital aims to improve margins and average selling prices (ASPs) for its refractive business in 2025, despite not providing specific guidance due to macroeconomic uncertainties [2][3] - The company is targeting a long-term revenue contribution of 30% from overseas business, up from the current 11-13% [2] Refractive Business Performance - In Q1 2025, refractive revenue grew by 24% year-over-year, driven by both volume and price growth [3] - ASPs in the refractive business increased by over 10% YoY, attributed to upgrades in surgical types and reduced promotional discount intensity [3] - Surgical volume in Q1 2025 increased by over 10% YoY, with demand skewed towards Q1 and Q3 due to seasonal factors [3] Optometry Business Insights - Optometry revenue increased by approximately 20% YoY in Q1 2025, primarily driven by volume growth, while ASPs remained stable [4] - The transition from traditional eyeglasses to defocus lenses continues to show double-digit growth [4] - The cataract segment is facing challenges due to DRG/DIP reforms, with revenue growth impacted by price cuts from the May 2024 cataract IOL VBP [4] Financial Metrics and Valuation - The company has a 12-month price target of Rmb18.90, with a current price of Rmb12.41, indicating a potential upside of 52.3% [10][12] - The forecasted earnings per share (EPS) for 2025 is Rmb0.44, with expected growth to Rmb0.64 by 2027 [6] - Aier Eye Hospital is rated as a "Buy" by UBS, with a projected P/E ratio of 42.8x for 2025 [10] Risks and Challenges - Key risks include weak consumer spending, potential government price controls, slower-than-expected growth of acquired hospitals, and intensified competition in the ophthalmology sector [16] - The company is focusing on organic growth and the expansion of existing facilities, while also considering larger-scale M&A for international growth [4][16] Additional Insights - The company has developed a mature model for tiered chain operations and is leveraging its medical management experience to empower acquired entities [14] - The performance of the refractive and optometry business was noted to be lackluster in April, typically an off-season month, with demand expected to pick up in the summer [2][4] This summary encapsulates the key insights and financial metrics discussed during the conference call, providing a comprehensive overview of Aier Eye Hospital's current position and future outlook in the ophthalmology sector.