Last Traded Price (9 Jun 2021): RMB11.34 (CSI300 Index :
Price Target 12-mth: RMB16.80 (48% upside) (Prev RMB20.60)
Mark KONG CFA, +852 36684187

Order book recovery to drive share price
Investment Thesis

Order book recovery to sustain and drive share price. Despite a 40% yoy growth in 5M21 order book, market concerns remain on its sustainability, given a >70% cut in 2021 expense budget on its direct hospital by National Health Commission (NHC). We, however, expect the order book recovery to sustain. There are only 101 institutes directly under NHC, hence most hospitals in China have autonomy over their own IT investment. They also have financial resources due to the revenue surge driven by patient visit (up 41% y-o-y in 1Q21 already). And given the need to upgrade their IT infrastructure to cater for the possible change of medical reimbursement system nationwide in 2022, we expect spending on medical IT to continue.