CICC has issued a research report maintaining its "Outperform" rating and target price of HK$8.30 for PA Gooddoctor (01833), based on DCF valuation, implying 49.3% upside from the current share price. The company recorded revenue of RMB 3.508 billion for the first three quarters of 2026, with net profit of RMB 248 million, up 35.0% year-on-year; adjusted net profit reached RMB 258 million, up 19.5% year-on-year, in line with the bank's expectations. The bank maintained its forecast for the company's net profit attributable to shareholders for 2026 and 2027 at RMB 239 million and RMB 385 million, respectively.
Continued Push to Optimize Revenue Structure, Corporate Health Management Business Steadily Expanding
The company continues to focus on its core medical health and elderly care businesses, proactively optimizing its revenue structure. Breaking down revenue, for the first three quarters of 2026, the bank estimates that commercial insurance synergy business declined by a single-digit percentage year-on-year, while the corporate health management business maintained rapid growth of over 40% year-on-year. As of the end of the third quarter of 2026, the number of paying corporate clients over the past 12 months exceeded 8,100, up nearly 60% year-on-year; other businesses continued the proactive streamlining trend from the first half of 2026, further increasing the proportion of core business revenue. Looking ahead to the fourth quarter, the bank expects the company to further proactively reduce low-gross-margin businesses such as traditional corporate group health checkups, which may have a certain impact on revenue growth in the short term but will help further optimize the business structure.
Continued Deepening of the "Four-Reach" Service System, AI Empowering Medical Services to Improve Quality and Efficiency
Leveraging the ecosystem resources of Ping An Group, the company continues to improve its integrated online and offline medical health service network. As of the end of the third quarter of 2026, the Ping An Medical Health Pay QR code payment has covered 169,000 pharmacies nationwide, and the number of customers qualified for home-based elderly care services exceeded 320,000. Meanwhile, the company continues to advance the implementation of AI medical scenarios. The cumulative number of users of AI doctors is nearly 13 million, and the multidisciplinary consultation platform for complex diseases covers four major disease categories, with an accuracy rate of approximately 90% for diagnosis and treatment plans.
Business Structure Adjustment Continues, Expecting Profit Quality Improvement to Take Effect
For the first three quarters of 2026, the company's adjusted net margin was 7.4%, up approximately 2 percentage points year-on-year, mainly benefiting from the contraction of low-gross-margin businesses, revenue structure optimization, and AI-driven improvement in core business gross margins. The profit margin in the third quarter alone declined compared to the first half, which the bank estimates is mainly due to the company proactively contracting revenue while expenses remained basically stable in absolute terms, temporarily pushing up the expense ratio. The company expects that the reduction of low-gross-margin businesses such as traditional group health checkups will be more reflected in the fourth quarter and subsequent signing cycles. The bank looks forward to further reflection of the improvement trend in core business quality and profitability in the financial statements after the business structure adjustment is completed.
Earnings Forecast and Valuation
CICC maintained its forecast for PA Gooddoctor's net profit attributable to shareholders for 2026 and 2027 unchanged at RMB 239 million and RMB 385 million, respectively. The bank maintained its "Outperform" rating and target price of HK$8.30, based on DCF valuation, implying 49.3% upside from the current share price.
Risk Factors
Synergy with Ping An Group falling short of expectations; intensifying industry competition; policy changes.
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