3 Things Investors Should Know Before Buying Ping An Good Doctor Shares

Ping An Healthcare and Technology Co Ltd (SEHK: 1833), better known as Ping An Good Doctor, is a one-stop healthcare ecosystem platform in China.

It is also one of the beneficiaries of the Covid-19 outbreak thanks to more customers using its services, such as online medical consultations.

Ping An Good Doctor’s strong prospects might have attracted retail investors who are interested in this industry. Here, I’ll look into three aspects to help investors better understand the company.

1. Key financials

The first area to focus on here is Ping An Good Doctor’s key financials over the last few years, which will give us a quick overview of its performance.

From 2015 to 2019, revenue grew from RMB 279 million (US$40 million) to RMB 5.1 billion. Similarly, gross profit improved from RMB 111 million to RMB 1.2 billion. Overall, impressive growth in both metrics during this period.

Despite its revenue growth, Ping An Good Doctor has yet to report a profit, with its net loss expanding from RMB 324 million in 2015 to RMB 734 million.

On a slightly more positive note, its net loss has reduced over the last two years from the peak of RMB 1 billion as operating leverage kicks in.

In short, Ping An Good Doctor has been growing rapidly over the last few years on the back of significant investment, which explains the continued loss-making position.

2. Major owners

The next aspect that investors should know here is the major backers of Ping An Good Doctor. This is important since the long-term aspiration of these owners would likely influence the strategic direction of the company.

A quick search in the company’s 2019 annual report revealed two major shareholder groups, which are Ping An Insurance Group Co of China Ltd (SEHK: 2318) (41.31%) and Bang Qi Jian Limited (18.33%).

The former, Ping An Insurance, needs little introduction while two directors, Dou Wenwei and Wang Wenjun, are owners of the latter.

Both Dou and Wang are also directors in other Ping An-related companies, which indicate their connection to Ping An Insurance.

In other words, Ping An Insurance Group is the biggest backer of Ping An Good Doctor through its direct and indirect ownership of the healthcare company.

3. Financial strength

Lastly, Ping An Good Doctor must have the necessary financial means to invest and grow its business over the long term, considering that it’s still unprofitable.

As of December 31, 2019, the company has around RMB 7.4 billion in cash and cash equivalents and liquid financial assets, as well as another RMB 1.5 billion in longer-term financial assets. It also has zero debt.

With its strong financial strength, Ping An Good Doctor is well-positioned to execute its long-term growth plans.

For perspective, it used “only” RMB 504 million in operating cash flow in 2019, which is relatively small as compared to its huge cash hoard.

Foolish takeaway

Overall, Ping An Good Doctor is a fast-growing healthcare technology company that is well-positioned to grow thanks to the strong backing from its parent and its solid balance sheet.

Investors who are looking for high-growth investments should give the company a closer look.