Stock Idea Will China’s draft rules for online medical serv | FSMOne SG - Research Highlights

Stock Idea

Will China’s draft rules for online medical services threaten Ping An Good Doctor?

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• On 27 October 2021, China's National Health Commission (NHC) issued draft rules for stricter regulation of the country’s fast-growing internet healthcare sector, leading to a massive sell-off in Chinese online healthcare stocks.

• The draft rules, released to solicit public feedback, indicates that medical judgements must be conducted by a registered doctor, while also calling for greater supervision of the internet healthcare sector.

• It raises the requirements for increasing the quality of online medical services, to filter out companies engaging in fraudulent medical activities.

• However, the long-term growth story of the internet healthcare sector remains intact as Chinese patients have become increasingly receptive to these digital health services.

• Nevertheless, near-term headwinds remain, and we revise our 2023 target price for Ping An Good Doctor to HKD­­­­­­­­ 56, based on a fair PS multiple of 5.0X, translating to an attractive upside potential of 124%,

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: Ping An Good Doctor (HKEX:1833)