INITIATE AT BUY. Yidu Tech is the largest healthcare big data specialist in China with 5% market share. It analyzed 1.7bn healthcare records from 400mn patients and developed a suite of big data analytics solutions for the healthcare industry.
We expect Yidu Tech revenue to grow at 47% CAGR in FY21-24E, reaching RMB2.8bn as China increasing big data solution adoption in healthcare industry (market growing at 40% CAGR).
Largest healthcare big data solution provider in China. Yidu Tech, founded in 2014 and listed on HKEx in Jan 2021, ranked no.1 in terms of revenue in China with 5% market share in 2019, according to EY. Yidu Tech built proprietary data intelligence infrastructure, YiduCore, through analyzing 1.7bn healthcare records from over 400mn patients upon authorization. Based on this “medical brain”, Yidu Tech developed a suite of big data analytics- driven solutions for the healthcare industry.
China healthcare big data solutions market growing at 40% CAGR. China is still in an early stage to adopt big data solutions in healthcare industry (7.2% penetration in 2019). China healthcare big data solutions market is expected to grow from RMB10.5bn in 2019 to RMB57.7bn in 2024 (40.5% CAGR) and life science solutions should deliver the stronger growth at 52.8% CAGR. The entry barrier is high with hurdles including hospital coverage, follow-up data accumulation and advanced technology capabilities.
Yidu Tech to deliver 46% revenue CAGR in FY21-24E. Yidu Tech has 3 business segments namely 1) big data platform for hospitals and regulators (46% of FY21 revenue), 2) life science solutions for pharmaceutical, biotech and medical device companies (21%) and 3) health management platform (for patients and insurance companies (29%). We expect Yidu Tech revenue to grow from RMB867mn in FY21 to RMB2,772mn in FY24E (47% CAGR), mainly driven by increasing no. of active customers, especially in life science sector (80% FY21-24E revenue CAGR) where big data solutions create highest value that shorten drug/ medical device development cycle.
Initiate at BUY. We initiate at BUY with target price of HK$43.41. Our SOTP valuation implied 20x FY23E P/S, in-line with life-science solution peers average. Downside risks include tightening regulations in data privacy, lower than expected adoption and intensifying competition.