Ping An Health Earnings: Disappointing Results Again and Time Is Running Out To Demonstrate Growth

We maintain our fair value estimate at HKD 18 for no-moat Ping An Health although first-half 2023 revenue disappointingly fell 20% year on year to CNY 2.2 billion, a 33% decline sequentially. Management indicates that restructuring is complete and the development phase of its new business began in July, so we should see a lesser drag to second-half performance. The market appears to like this news, with shares up over 5% on Aug. 25. At the current share price, we believe that the market is already assuming that the company can achieve modest growth, but we believe it may be too early to assume success. We note that average medical service revenue per client declined by 43% year over year in the June half, which suggests that robust long-term revenue growth may still be a challenge. We think the shares are fairly valued and would prefer to wait for more tangible signs of a durable growth recovery.