UOB Kay Hian
Date of Report: 27 August 2025
Aier Eye Hospital Group Delivers Satisfactory 1H25 Performance, Eyes Global Leadership in Ophthalmology
Overview: Strong Results Amid Challenging Environment
Aier Eye Hospital Group, the world’s largest ophthalmic medical service provider, reported robust financial and operational results for the first half of 2025. Despite economic headwinds, the company continues to expand its leadership in eye care, propelled by network expansion, service capability enhancement, and operational efficiency improvements. The management remains optimistic about the growth outlook, reinforced by resilient demand for ophthalmic services.
Stock Snapshot and Major Shareholders
– **Share Price:** RMB 13.83 – **Target Price:** RMB 16.70 (Upside: +20.7%) – **Market Cap:** RMB 128,970.2 million (~USD 18,024.4 million) – **Shares Issued:** 9,325.4 million – **GICS Sector:** Health Care – **Major Shareholders:** – Mr. CHEN Bang: 43.0% – Mr. LI Li: 10.3%
Share Price Performance (as of reporting date)
– **52-week high/low:** RMB 19.09 / RMB 9.05 – **Performance:** – 1 month: +5.5% – 3 months: +10.2% – 6 months: -0.8% – 1 year: +38.9% – YTD: +4.4%
Key Financial Highlights for 1H25
| Metric |
2Q24 |
2Q25 |
YoY % Change |
1H24 |
1H25 |
YoY % Change |
| Revenue (Rmbm) |
5,349 |
5,481 |
2.5% |
10,545 |
11,507 |
9.1% |
| Gross Profit (Rmbm) |
2,704 |
2,694 |
-0.4% |
5,214 |
5,588 |
7.2% |
| Net Profit (Rmbm) |
1,150 |
1,001 |
-13.0% |
2,050 |
2,051 |
0.1% |
| Adjusted Net Profit (Rmbm) |
942 |
980 |
4.0% |
1,785 |
2,040 |
14.3% |
Margin Analysis and Expense Breakdown
| Metric (% of Sales) |
2Q24 |
2Q25 |
YoY ppt Change |
1H24 |
1H25 |
YoY ppt Change |
| Gross Profit Margin |
50.6% |
49.2% |
-1.4 |
49.4% |
48.6% |
-0.9 |
| Selling Expense |
11.9% |
9.3% |
-2.6 |
10.6% |
9.1% |
-1.5 |
| Administrative Expense |
13.6% |
14.6% |
+1.0 |
13.5% |
13.5% |
0.0 |
| R&D Expense |
1.4% |
1.4% |
0.0 |
1.4% |
1.3% |
-0.1 |
| Adjusted Net Profit Margin |
17.6% |
17.9% |
+0.3 |
16.9% |
17.7% |
+0.8 |
Key Takeaways: Operational and Strategic Highlights
- Revenue Growth: Total revenue reached RMB 11.5 billion in 1H25, up 9.1% year-on-year. Both outpatients and surgeries saw volume increases of 16.47% and 7.63%, respectively, to 9.25 million and 0.88 million cases.
- Margin Dynamics: Gross margin softened by 0.9ppt to 48.6%, affected by new acquisitions, higher depreciation, and medical insurance policy changes. Selling expense/revenue ratio fell by 1.5ppt, supporting a rise in adjusted net margin to 17.7%.
- Service & AI Integration: The company is advancing service upgrades and leveraging AI to improve operating efficiency and clinical excellence, with a focus on specialties such as refractive surgery, cataract, optometry, retina, cornea, and glaucoma. New areas include orbital diseases, ocular oncology, neuro-ophthalmology, and pathology.
- Network Expansion: As of end-June 2025, Aier operated 355 ophthalmic hospitals and 240 eye care clinics in China, plus 169 ophthalmic centers and clinics overseas. Overseas revenue grew 18% year-on-year, now making up 12.6% of total revenue, with a long-term goal of 30-50% overseas contribution.
Comprehensive Financials and Guidance
| Year to Dec 31 (Rmbm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
20,367 |
20,983 |
22,686 |
24,421 |
26,766 |
| EBITDA |
5,984 |
5,373 |
6,228 |
6,797 |
7,566 |
| Operating Profit |
5,328 |
4,568 |
5,272 |
5,763 |
6,458 |
| Net Profit (Reported) |
3,359 |
3,556 |
3,956 |
4,342 |
4,891 |
| Net Profit (Adjusted) |
3,514 |
3,099 |
3,606 |
4,211 |
4,760 |
| EPS (Fen) |
37.7 |
33.2 |
38.7 |
45.2 |
51.0 |
| PE (x) |
36.7 |
41.6 |
35.8 |
30.6 |
27.1 |
| Dividend Yield (%) |
1.1 |
1.2 |
1.3 |
1.4 |
1.6 |
| Net Margin (%) |
16.5 |
16.9 |
17.4 |
17.8 |
18.3 |
| Net Debt/(Cash) to Equity (%) |
(23.6) |
(15.0) |
(18.9) |
(28.4) |
(37.0) |
| ROE (%) |
18.9 |
18.0 |
18.1 |
17.9 |
18.1 |
Strategic Growth Drivers and Outlook
- Resilient Demand: The rapidly ageing population and essential nature of eye care fuel ongoing demand, even in slower economic cycles.
- Volume-Based Procurement and Insurance: The shift to Diagnosis-Related Group/Diagnosis-Intervention Packet (DRG/DIP) schemes is expected to benefit patients and stimulate demand, favoring leading providers.
- AI and Service Upgrading: Accelerated implementation of AI is anticipated to further boost operational efficiency and clinical outcomes.
- International Expansion: Aier’s aggressive M&A and organic growth strategy positions it as the largest global ophthalmology group. Overseas expansion outpaces domestic, aiming for a 30-50% international revenue contribution long term.
Risk Factors
- Policy uncertainties, especially regarding medical insurance and healthcare regulations
- Potential negative impacts from macroeconomic weakness
- Risks associated with expansion, both domestic and international
Valuation and Recommendation
– **Recommendation:** Maintain BUY – **Target Price:** RMB 16.70 per share – **Valuation Basis:** Discounted Cash Flow (DCF) with a WACC of 8.9% and terminal growth rate of 4.5%
Stock Price Catalysts
- Revenue and profit contributions from newly-acquired hospitals
- Execution of effective growth strategies, leveraging both M&A and organic initiatives
- Continued expansion in China and overseas markets
Conclusion: Aier Eye Hospital Group Positioned for Sustainable Growth
Aier Eye Hospital Group has proven its resilience and strategic agility in a challenging macroeconomic landscape. With a comprehensive approach to network expansion, service capability upgrades, and innovative AI applications, Aier is well-positioned to maintain its leadership in the global ophthalmology market. The company’s robust financials, ambitious international expansion, and steady improvement in operational efficiency make it an attractive investment for those seeking exposure to the fast-growing healthcare sector.
Broker: UOB Kay Hian
Date: 27 August 2025
