What is the future investment value of private physical examination industry from "three parts of the world" to "two powers competing"?

The private physical examination industry has always been one of the key development areas of the medical service sector Once upon a time, the three companies of Aikang Guobin, meinian health and Ciming physical examination were the three giants of the domestic private physical examination industry, which had already staged a round of fierce competition many years ago At that time, it could be said that they were in the era of "three parts of the world" Until 2014, meinian health, which was not listed, broke the balance of "Three Kingdoms", and the company announced to purchase the third-largest Ciming medical examination in the industry in two batches On December 19, 2014, meinian health completed the first acquisition of 27.78% shares of Ciming health examination, and agreed to lock the remaining 72.22% shares into acquisition within three years In July 2017, Ciming health examination finally became a wholly-owned subsidiary of meinian health This "strong alliance" transaction also made meinian health a "big brother" in the domestic private health examination industry So far, the domestic private physical examination industry has officially changed from the era of "three parts of the world" to the pattern of "two males competing for hegemony" So, which is better, meinian health and Aikang Guobin? How about the investment value in the future? Let's study it in depth with brother Zong 1、 The company profile of the two giants is meinian health, full name of meinian Health Industry Holding Co., Ltd (commonly known as "meinian health"), founded in 2004 by Yu Rong At present, the company has four brand systems: meinian health, Ciming physical examination, Ciming AoYa health management hospital and meizhao health In August 2015, meinian health successfully listed in A-share market by borrowing from Jiangsu Sanyou In terms of the number of physical examination centers, meinian health had 94 physical examination centers by the end of 2014 before listing, and more than 100 holding physical examination centers in the year of listing After the listing and financing, the company accelerated the scale expansion and network sinking By the first half of 2019, the company's physical examination center had reached 684 physical examination branches (including under construction), covering 31 provinces, autonomous regions and 311 cities in China In the first half of the year, the number of physical examinations was 10.38 million, while in 2018, the number of physical examinations exceeded 27.78 million, making it the largest and most widely distributed professional body in China Inspection and medical service institutions In just a few years, the number of healthy stores in meinian has increased greatly Aikang Guobin, formerly aikang.com, was founded in Beijing in February 2004 by Zhang Ligang, who is also the academic background of Harvard, Columbia and Fudan University The founder of "overseas returnee" is a powerful person In 1998, he returned to China to join Sohu at the invitation of Zhang Chaoyang After one year's work, he left and founded elong In less than five years, eLong was listed on NASDAQ After that, I formally founded the Aikang Guobin company In the tenth year after its establishment, Akon Guobin successfully landed on the Nasdaq Stock Exchange on April 9, 2014, which was the first share listed in China's health examination industry at that time However, due to the cold situation in the overseas market and the low stock price, Ikon Guobin announced the start of privatization on August 31, 2015 After that, in January 2019, Aikang Guobin completed the privatization In terms of the number of physical examination centers, as of the end of 2014, there were only 50 Aikang Guobin, far lower than the 94 healthy ones in the United States, but the operating revenue and net profit were better than those in the United States It can be seen here that 2014 is the beginning of the battle among the three private medical giants Aikang Guobin, listed on NASDAQ in 2014, actually raised $100 million and valued at $900 million On March 5, 2014, meinian health also announced that it would be listed on the A-share main board in 2015 On December 19 of the same year, meinian health completed the first acquisition of 27.78% shares in Ciming health examination, and agreed that the two companies would merge in the next three years After the merger, the gap between meinian health and Aikang Guobin began to narrow slowly After A-share listing, the former surpassed the latter See the financial statements of the following two companies for details 2、 Interpretation of the financial statements of the two giants let's take a look at the operating income and net profit of the two private medical giants As can be seen from the above two figures, in 2015, the total revenue of 2.101 billion yuan was slightly higher than that of 1.89 billion yuan of Aikang Guobin, and the former gained a small advantage with a net profit of 260 million yuan And in the next few years of growth, the health of the United States gradually widened the gap between the two countries The reason lies in that after meinian health got financing in the capital market, it started crazy scale expansion and M & A activities, in order to compete for a huge market share How crazy is it? Since 2011, meinian health has implemented the strategy of extension expansion Let's look at its "M & a history." In 2011, meinian health industry merged with Shenyang grand health, becoming "meinian grand health" Subsequently, meinian health made a lot of M & A and rapid layout Since the acquisition of Shenzhen Regel in 2012, the company has successively acquired Shenzhen hongkangjie, Beijing Lvshengyuan, Wuhan Yibo, Changshu Hanci, Guizhou Kangyuan, Anhui boruikang and other physical examination institutions of different sizes, and quickly entered the local market In July 2016, it participated in Haozhuo data and Meiyin gene, and reached cooperation with elephant medical In October of the same year, it acquired meizhao medical, one of the three high-end medical examination brands in the world In April 2017, Wandong Medical, a listed company, transferred 22% of its shares to Yu Rong, the actual controller of meinian health Among them, Ciming health examination is the most famous merger and acquisition event of meinian health In 2017, the company finally brought Ciming health examination under its command At the same time, meinian health officially became the "first brother" of the private health examination industry after merging tables So far, this acquisition has officially changed the pattern of "three parts of the world" in the industry At the same time of the healthy increase of M & A in the US, the company is also frantically expanding its scale In recent years, the number of healthy stores in the United States has increased from more than 100 listed in 2015 to 633 in 2018, and the expansion speed is not too fast In the implementation of these strategies, the company's performance has naturally risen to a higher level Healthy in the United States has achieved high performance growth for many years in a row The total revenue has increased from RMB 1431 million in 2014 to RMB 8458 million in 2018, and the attributable net profit has increased from RMB 139 million to RMB 821 million In more than four years, the two indicators have both increased by nearly five times As can be seen from the above figure, since 2015, there has been a large gap between the sales gross profit margin of meinian health and Aikang Guobin In 2015-2017, the gross profit margin of Aikang Guobin fell sharply, 46.71%, 43.12% and 39.84% respectively Although the health in the United States also declined, it remained at a stable level of about 47%, and the gross profit margin was higher than that of Ikon This shows that meinian health not only accelerates the scale expansion, but also improves the core competitiveness of the products and the service ability of the physical examination center, which does not affect the profitability of the products From the perspective of the company's strategic layout, meinian health proposed to raise the proportion of group inspection and individual inspection to 7:3 At present, there are 306 first tier and second tier physical examination centers and 287 third tier and fourth tier physical examination centers nationwide The market share of the first tier, second tier and third tier and fourth tier is 51.6%: 48.4% While consolidating the advantages of the first tier and second tier cities, the layout of the third tier and fourth tier markets has been strengthened Since 2017, although Aikang Guobin has slowed down the expansion of its stores, it has strengthened its internal management and improved its efficiency, which has also significantly improved the gross profit margin of sales From the analysis of Aikang Guobin's operation, at present, it mainly focuses on the physical examination of enterprises, with the proportion of income kept at more than 80% In recent years, the proportion of individual examinations has been slowly increasing From the perspective of development trend, the current group inspection market is basically saturated, and the greatest potential of the future market lies in personal business So in the first half of 2019, it surpassed the US health This shows that a strong management is very important for the company The main reason why the healthy sales gross profit rate of meinian is reduced is that the stores expand too fast For the heavy asset type operation mode of physical examination center, huge cost is invested in the early stage, and it will take several years to officially make profits As the physical examination center will enter the operation stage after its completion, the cost will gradually increase, which will weaken the profitability of the store, so the gross profit margin will be affected As can be seen from the above figure, since 2015, the proportion of sales expenses in total revenue of meinian health has remained high This is mainly because the company pays attention to the mode of marketing ability, which is also the "common fault" of the service industry It can be seen from the financial report in 2018 that in the healthy sales expenses of the United States, the four expenses of labor cost, advertising and publicity cost, business development cost and car rental cost account for more than 80% of the total sales expenses At the same time, the ratio of three expenses (sales expense, management expense and financial expense) to revenue has been on the rise This is mainly because while the company is accelerating its expansion, its expenses are also increasing significantly, especially its liabilities and goodwill are increasing According to the company's financial report, the increase in management expenses is due to the addition of new medical centers and personnel in recent years, resulting in salaries and employee benefits, as well as the granting of share based payment compensation fees Looking at the expansion of meinian health in recent years, we can use the word "Crazy" to describe it In 2016, the company built nearly 200 new physical examination centers, and in 2017, it also added hundreds of new physical examination centers In particular, since 2019, the company has accelerated its expansion speed, adding 50 stores in half a year, and 108 of the 300 subsidiaries acquired are premium acquisitions, generating goodwill of up to 5.129 billion yuan Among them, 2.863 billion yuan of goodwill, accounting for 60.41% of the total goodwill, has been formed by the acquisition of Ciming medical examination Ciming health also made a performance commitment when it was acquired, in which the net profit attributable to the parent in 2019 should reach 248 million yuan, while Ciming health lost 10.437 million yuan in the first half of the year and 21.472 million yuan in the same period of 2018 As you know, the total revenue of meinian health in 2018 is only 8.458 billion yuan, and the proportion of goodwill to revenue is about 29%, which is not "Crazy" Moreover, behind the rapid expansion of the company is the soaring debt ratio Over the past four years, the company's liabilities have risen from 1 billion 239 million yuan in 2015 to 10 billion 451 million yuan in the first half of 2019, a full 8.43 times increase At the same time, as meinian health pays more attention to the extension expansion, the endogenous growth is not prominent Compared with regular hospitals, private physical examination centers mainly rely on equipment testing, rather than too many high-tech doctors, so there is little investment in research and development But at the same time, there will be a lot of problems Most of the private physical examination institutions have far less outstanding problems than the public hospitals, that is, the operation is not standardized enough, and the diagnosis and treatment services after examination are not good enough 3、 From the perspective of the development trend of the medical service industry, the extension expansion strategy is the key business model of the industry Therefore, it is easy to form a leading enterprise As early as 2015, Ikon announced its privatization plan At this time, Jiangsu Sanyou, a shell company of meinian health, made an offer to acquire Aikang Guobin, but in December, Zhang Ligang launched the "poison pill plan" to prevent the malicious acquisition of Jiangsu Sanyou The so-called "poison pill plan" is when a company encounters a hostile takeover