Hong Kong stock concept tracking | Medical service sector welcomes important positive news! Beijing, Tianjin, Shanghai and other 9 regions are planned to be allowed to set up wholly foreign-owned hospitals (with concept stocks attached)

On September 8, the Ministry of Commerce, National Health Commission, and National Medical Products Administration issued a notice regarding the pilot program for expanding openness in the medical field. It is proposed to allow the establishment of wholly foreign-owned hospitals (excluding traditional Chinese medicine and excluding the acquisition of public hospitals) in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the entire island of Hainan. Specific conditions, requirements, and procedures for establishing wholly foreign-owned hospitals will be notified separately. Hunan Securities believes that with the disclosure of the semi-annual report, the risks of performance pressure in the medical service sector related companies have been fully released. Looking ahead to the second half of the year, the overall performance of related companies is expected to improve quarter by quarter. In fact, as early as August 2014, the National Health Commission and the Ministry of Commerce issued a notice to pilot the establishment of wholly foreign-owned hospitals in seven provinces and cities including Beijing. Overseas investors were allowed to establish wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Jiangsu, Fujian, Guangdong, and Hainan through new establishment or acquisition. However, the notice explicitly stated that, except for investors from Hong Kong, Macao, and Taiwan, other foreign investors are not allowed to set up traditional Chinese medicine hospitals in the above-mentioned provinces and cities. However, the policy changed again later. On March 13, 2015, the National Development and Reform Commission and the Ministry of Commerce issued a revised version of the Catalogue of Industries for Guiding Foreign Investment, which included medical institutions in the restricted category. In 2017, the revised Catalogue of Industries for Guiding Foreign Investment issued by the State Council once again clarified that the participation form of medical institutions is limited to joint ventures and cooperation. Until 2024, the government work report proposed to relax market access for the medical and other service industries. The issuance of this policy marks a crucial step in the opening up of China's medical market, heralding a profound transformation in the country's medical industry. Market analysts believe that foreign-owned hospitals are not just the introduction of medical institutions, but they may also drive the development of the entire medical-related industry. For example, with the entry of foreign-owned hospitals, advanced medical equipment, pharmaceutical research and development, medical informatization, and other related fields may also see new development opportunities. Additionally, it will also push China's medical policy further towards internationalization. In order to compete with foreign-owned hospitals, domestic medical policies may evolve towards a more diversified and market-oriented direction. Pricing of medical services, scope of medical insurance coverage, hospital management models, etc., may all undergo changes under the impact of foreign-owned hospitals. Looking ahead, the development trend of wholly foreign-owned hospitals in China will show a diversified characteristic. With policies gradually being implemented and market conditions improving, it is expected that more foreign medical enterprises will enter the Chinese market, especially in the areas of high-end medical care, specialized departments, and health management, forming a market pattern dominated by foreign capital. Related concept stocks: HYGEIA HEALTH (06078): The company achieved significant growth in performance in the first half of 2024. The company's revenue increased from RMB 17.59 billion in the same period of 2023 to RMB 23.82 billion, a growth of 35.4%. Among them, hospital business revenue increased by 37.2% to RMB 23.08 billion, accounting for 96.9% of total revenue. Gross profit increased by 32.5% year-on-year to reach RMB 756 million, with a gross profit margin of 31.8%. CR MEDICAL (01515): Recently, the company announced its mid-year performance for 2024, with revenue of approximately RMB 4.976 billion, a decrease of 2.69% year-on-year; the company's attributable net profit was approximately RMB 434 million, an increase of 9.12% year-on-year. PA GOODDOCTOR (01833): The company's revenue in the first half of 2024 was RMB 20.9 billion, achieving profit for the first time with a profit of over RMB 60 million, and an adjusted net profit of nearly RMB 90 million. Among them, strategic business revenue increased by 19.7% year-on-year, achieving steady growth, with service revenue from insurance and financial clients reaching RMB 11.2 billion, a 3.4% year-on-year increase, while service revenue from corporate employee health management reached RMB 7.1 billion, a significant increase of 58.8% year-on-year.