1Q21 attributable net profit grew 42% yoy, helped by broad pandemic recovery and consolidation of new hospitals
　　We revised down FY21E/22E adj. EPS by 10%/9% to mainly reflect a c.9% dilution effect of recent new share issuance
　　We revised up SOTP-based TP to HKD9.5. Maintain BUY on strong SOE-hospital execution and attractive 7% FY22E div yld
　　Steady recovery in 1Q21
　　1Q21 operating income grew 22% yoy. In finance and advisory business, mgmt. sees a double-digit growth in revenue and gross profit, thanks to sustained growth in interest-earning assets （IEA） and decrease in financing cost. Mgmt. expects the stable net interest spread and net interest margin in 1Q21 to sustain in the remaining of 2021, supported by a diversifying IEA portfolio （non-healthcare asset has accounted for ~35% of total finance lease income in 2020 vs. ~26% in 2019） and potential savings of financing cost. We think Co. is competitive with its well-built leasing franchise in China and to sustain a low-teen growth in finance and advisory business over 2021E/22E. Meanwhile, mgmt. see strong rev growth in its hospital segment （~40% yoy）， helped by hospitals’ operation returning to normal and two new SOE-hospital consolidation.
　　On track with SOE-hospitals consolidation progress
　　Co. has consolidated 40 SOE-hospitals （c.10k beds） at end-1Q21. Mgmt. targets to consolidate 9+ contracted SOE hospitals （c.5k beds） in the remaining of 21E, expanding its total bed capacity to c.15k. In addition, Co. is confident to improve net margin of these medical institutions in 3-5 years （up to 8-10% from current below 3%）。 In our 2025E base case, assuming ~6% avg. NPM in healthcare service and ~10% NPM in supply chain service across its 49+ SOE-hospitals （total rev of RMB5.5bn in 21E with 5% CAGR over 2021-25E; Co. owns avg. ~55% stake of these assets）， we reckon these hospital assets could add ~RMB400-500mn of meaningful earnings accretion to Co. attributable net profit in 2025E.
　　Improved share structure, well-capitalized to grow; BUY
　　We rolled forward to YE21E basis and lift SOTP-based TP to HKD9.5 from HKD9.2. We believe recent new share placement to new investor （Yuanzhi Group, ~9% of current share base） and convertible bonds issuance to existing shareholder （CITIC Capital, accounted for 9% of enlarged share base if exercise of conversion） should improve Co.’s shareholder structure and add capital flexibility to pursue more M&A opportunities. Maintain BUY.