Summary of Aier Eye Hospital Conference Call Company Overview - **Company**: Aier Eye Hospital (300015.SZ) - **Industry**: Healthcare, specifically ophthalmology services Key Points Refractive Business Performance - The refractive business experienced lower-than-expected volume growth, but the Average Selling Price (ASP) increased due to a higher mix of premium procedures [1][3] - Premium procedures now account for approximately 40% of total refractive surgeries, contributing to stable pricing and reduced price competition [6][9] - The company noted a year-over-year growth of about 10% in the first three quarters and October, primarily driven by premium surgical procedures [6] Cataract Business Challenges - The cataract business faced significant pressure, with volumes declining by high-single to low-double digits, despite stable revenue due to the acquisition of 87 hospitals [7][9] - ASP for cataract procedures rebounded by approximately 5-6% year-over-year, driven by increased adoption of functional lenses and self-pay procedures [7] - The company is promoting functional lenses and self-pay projects to mitigate reliance on medical insurance, although this transition will take time [7] Financial Outlook - The company anticipates short-term margin pressure due to new hospital costs and rising labor expenses, with gross and net margins expected to remain flat or slightly decline [8] - Aier Eye Hospital is focusing on operational optimization and expansion of self-pay services to achieve steady growth [8] - The company has designated the next three years as "years of execution," emphasizing refined operations and profitability recovery [8] Investment Thesis - Aier Eye Hospital is positioned to capture increasing demand from the 50+ demographic, particularly in premium and out-of-pocket treatments [9] - The current valuation is seen as offering an attractive risk-reward profile, with a target price of Rmb15, representing a 24.5% upside from the current price of Rmb12.05 [2][12] Risks - Key risks include a slower-than-expected premiumization trend in cataract surgery, intensifying price competition in refractive surgery, and potential pricing pressure from policies related to OK lenses [12] Additional Insights - The company is optimistic about future growth despite acknowledging the challenging macroeconomic environment in China [8] - The share of public service applicants in refractive surgeries has increased to about one-third, indicating a shift in patient demographics [6] This summary encapsulates the critical insights from the conference call, highlighting the performance, challenges, and strategic outlook of Aier Eye Hospital in the ophthalmology sector.

Summary of Aier Eye Hospital Earnings Review Company Overview - **Company**: Aier Eye Hospital (300015.SZ) - **Industry**: Ophthalmology healthcare services in China Key Financial Results - **1H25 Revenue**: Rmb11,507 million, up 9.1% year-over-year (yoy), slower than expected (-1.6% vs. Goldman Sachs estimate) [1][2] - **1H25 Net Profits**: Rmb2,051 million, up 0.1% yoy, but down 9.9% vs. Goldman Sachs estimate due to lower non-operating income [1][5] - **EBIT**: Not explicitly stated, but implied to be in line with expectations [5] Segment Performance - **Refractive Surgery Revenue**: Grew by 11% yoy in 1H25, indicating strong demand despite weak consumption confidence [2][4] - **Optometry Services Revenue**: Increased by 15% yoy in 1H25, reflecting robust growth [2][4] - **Cataract Surgery Revenue**: Only grew by 3% yoy, attributed to: - Tightening national healthcare insurance budget in 2Q25 - Delayed demand due to weak macroeconomic conditions [2][4] Market Dynamics - **Demand Pull-Forward**: Earlier admissions for military academy/military recruitment created a pull-forward effect, impacting 2Q25 demand [1][2] - **Technological Advancements**: The company is promoting new technologies in refractive surgery (e.g., SMILE pro) to maintain average selling prices (ASP) and avoid price competition with smaller hospitals [2][11] Future Outlook - **Cataract Surgery**: Expected gradual improvement in 2H25 as the company adapts to the tightening budget [2] - **Target Market**: Increasing opportunities from the 50+ demographic with a net worth over Rmb3 million, particularly in premium treatments [11] Valuation and Investment Thesis - **Price Target**: Rmb15, with an upside of 8.5% from the current price of Rmb13.83 [12][14] - **Investment Rating**: Buy, supported by improving fundamentals and attractive risk-reward profile [11][12] - **Revised Profit Estimates**: Net profit estimates adjusted down by 2.6% for 2025E due to lower non-operating income and slight pressure on gross profit margin (GPM) [9][10] Risks - **Cataract Surgery Premiumization**: Risk of slower-than-expected premiumization trend [12] - **Price Competition**: Intensifying price competition in refractive surgery [12] - **Policy Impact**: Potential pricing pressure from policies related to OK lenses [12] Additional Insights - **Gross Profit Margin (GPM)**: Decreased to 48.6% in 1H25 from 49.4% in 1H24, primarily due to lower margins from newly opened flagship hospitals with high investment costs [9]

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].