Guosheng Securities covers EC Healthcare for the first time with a BUY rating and a target price of HK $11.50.

The main viewpoints of the paper are as follows:

01 Leading one-stop medical service provider

The company takes medical, aesthetic medical, beauty and wellness, and skincare and beauty products as its core business. It has covered more than 30 well-known consumer medical brands and operates 91 service centers/ clinics in Hong Kong, Macao, and Greater Bay Area.

02 An ecosystem of “medical aesthetics + medical services” with high retention

Centering on the core strategy of medical aesthetics and medical treatment, the company has widely developed medical brands such as orthopedics, pediatrics, gynecology and dentistry. With a complete and rich business ecosystem, the company realizes cross-selling and customer diversion among different businesses, with significant internal synergies.

03 Efficient customer acquisition through “public domain + private domain” traffic

Customer lifetime value is maximized via stable traffic and retention maintenance, while the cost of goods sold is lowered due to low-cost and efficient acquisition of customers. FY2022H1 continues to realize the rapid growth of the number of customers in the medical and aesthetic business, and the corresponding sales expense ratio is only 5.26%.

04 Integrate “organic + M&A” growth to drive business expansion

Since 2016, the company has extended its business horizontally through mergers and acquisitions, and established the largest consumer medical service matrix in Hong Kong.