增加支出以支持战略扩张

PA Good Doctor (1833 HK) has increased its spending to support strategic expansion. In 1H21, revenue increased 39% to RMB 38 billion, accounting for 41% of our full-year forecast. Services revenue (core business) increased 50.6% to RMB 10.7 billion, driven by growth in subscription services and electronic prescription services, accounting for 28% of total revenue. E-commerce板块同比增长27.9% to RMB 19 billion, accounting for 50% of total revenue. Gross margin decreased by 3.1 percentage points to 26.8%. The company's net loss expanded to RMB 879.3 million in 1H21, compared to RMB 213.2 million in 1H20, due to a significant increase in SG&A expenses, which were mainly driven by the addition of multiple functional departments. The company has a strong and diverse customer base, with 40 million registered users, 3.8 million paid users, and a conversion rate of 5.4%. The company has a comprehensive expansion strategy, with 10 self-owned internet hospitals and 205 hospitals with which it has signed a cooperation agreement. The government has issued positive signals for online healthcare services, such as allowing the sale of prescription drugs online and supporting the promotion of internet healthcare services. We believe that these regulations are positive for PAGD and other healthcare service providers, as they have a large internal and external doctor resource, a wide network of top hospitals, and a continuous upgrade of services to achieve true prescription conversion and seamless care terms. We maintain our buy rating. Based on a 10-year DCF model (WACC: 10.4%, terminal growth rate: 3.0%), we have adjusted our target price to HKD 73.80, reflecting slower revenue growth and increased operating expenses. We expect FY21E/22E/23E revenue to grow 41%/33%/31%, FY21E/22E/23E net loss to be RMB 17.92 billion/ RMB 16.26 billion/ RMB 10.94 billion. We remain optimistic about the company's growth prospects. Risks: slower user growth; regulatory crackdown.