标题：Dian DiagnosticsA leader in ICL with a “service + product” business model
发布日期：2016-03-09 11:29:23
内容： Investment positives China’s ICL market beginning rapid growth; leaders togrow stronger. In order to control healthcare costs, hospitalsare forced to seek revenue from services, driving the rapidgrowth in the market for outsourcing clinical diagnostics services.We expect Dian to benefit from the rapid growth in theoutsourcing of diagnostics services by Grade-II hospitals. Competitive advantages in channels; inorganic growthgaining momentum. With a “services + products” businessmodel, Dian is entering the hospital channel through its productagency services. This model has been successful in eastern Chinaand duplicated in other regions. Dian is in 18 provinces and plansto expand nationwide over the next 2~3 years. Smooth progress in new businesses; synergy withtraditional businesses to emerge gradually. Dian acquiredBiosan and entered the markets for maternal & child testing andsequencing. The new businesses may also generate synergieswith traditional businesses to some extent. Financials We expect its EPS to grow 58%, 80% and 37% in 2015e,2016e and 2017e to Rmb0.65, Rmb1.17 and Rmb1.60,respectively, mainly driven by growth in ICL and maternal & childtesting and the consolidation of the financial statements ofYuanding. Valuation and recommendation Initiate coverage with BUY. We use an SOTP approach to setour TP at Rmb67, based on 58x 2016e P/E, with a targetmarket cap of Rmb20.2bn. We expect net profit from the ICL &maternal and child testing businesses to be Rmb192mn andRmb65mn in 2016e. Given the accelerated progress ofhierarchical diagnosis and the development of sequencing, weset 65x 2016e P/E for these businesses, with market caps ofRmb12.5bn and Rmb3.9bn. The IVD agency business saw netprofit of Rmb96mn and we set our target valuation at 40x 2016eP/E, with a market cap of Rmb3.8bn. Risks Slower-than-expected growth in eastern China; policy risks.
发布日期：2016-03-09 11:29:23
内容： Investment positives China’s ICL market beginning rapid growth; leaders togrow stronger. In order to control healthcare costs, hospitalsare forced to seek revenue from services, driving the rapidgrowth in the market for outsourcing clinical diagnostics services.We expect Dian to benefit from the rapid growth in theoutsourcing of diagnostics services by Grade-II hospitals. Competitive advantages in channels; inorganic growthgaining momentum. With a “services + products” businessmodel, Dian is entering the hospital channel through its productagency services. This model has been successful in eastern Chinaand duplicated in other regions. Dian is in 18 provinces and plansto expand nationwide over the next 2~3 years. Smooth progress in new businesses; synergy withtraditional businesses to emerge gradually. Dian acquiredBiosan and entered the markets for maternal & child testing andsequencing. The new businesses may also generate synergieswith traditional businesses to some extent. Financials We expect its EPS to grow 58%, 80% and 37% in 2015e,2016e and 2017e to Rmb0.65, Rmb1.17 and Rmb1.60,respectively, mainly driven by growth in ICL and maternal & childtesting and the consolidation of the financial statements ofYuanding. Valuation and recommendation Initiate coverage with BUY. We use an SOTP approach to setour TP at Rmb67, based on 58x 2016e P/E, with a targetmarket cap of Rmb20.2bn. We expect net profit from the ICL &maternal and child testing businesses to be Rmb192mn andRmb65mn in 2016e. Given the accelerated progress ofhierarchical diagnosis and the development of sequencing, weset 65x 2016e P/E for these businesses, with market caps ofRmb12.5bn and Rmb3.9bn. The IVD agency business saw netprofit of Rmb96mn and we set our target valuation at 40x 2016eP/E, with a market cap of Rmb3.8bn. Risks Slower-than-expected growth in eastern China; policy risks.
