Nomura maintains Buy rating on Aier Eye Hospital and lowers target price to CNY13.13

Overview

This report presents Nomura's 2Q26 and full-year forecast revision for Aier Eye Hospital 300015.SS. Nomura expects the company's 2Q26F revenue to maintain moderate growth, while tax payments and higher other expenses significantly weigh on profit; in 2H26F, a low base and contributions from the Brazilian ophthalmic services group acquisition are expected to support accelerated revenue growth. Nomura maintains its Buy rating but modestly lowers the DCF target price from CNY13.32 to CNY13.13.

Core views

Key views include: first, 2Q26F revenue is expected to grow 6% YoY, driven by a modest increase in patient traffic and improved pricing from a higher proportion of premium surgeries; second, 2Q26F gross margin is expected to be 48.0%, down 0.9 percentage points YoY, while operating margin is expected to remain flat at 23.8%; third, tax payments pressure net profit, with 2Q26F attributable net profit expected to decline 51% YoY; fourth, 2H26F revenue growth is expected to accelerate to 16% on a low base and contributions from the Brazilian acquisition, while net profit is expected to grow 33% YoY; fifth, valuation remains based on DCF, supporting a maintained Buy rating despite the lower target price.

Analysis framework

The report combines company earnings forecast revisions with DCF valuation, assessing quarterly revenue, gross margin, operating margin, taxes, acquisition contributions and net profit changes, and comparing the forecasts with Bloomberg consensus estimates. The valuation uses a DCF model with a WACC of 9.4% and a perpetual growth rate of 4.0% to derive a 12-month target price.

Methodology notes

• Valuation methodDCF

  Discounted cash flow valuation

  The CNY13.13 target price is based on a DCF model assuming a WACC of 9.4% and a perpetual growth rate of 4.0%; both assumptions remain unchanged.

• Earnings forecastSegment revenue and profit forecasts

  Revision of revenue, profit and tax assumptions by business segment and half-year cadence

  The report estimates revenue for the refractive, cataract, examination and treatment segments, incorporating the impact of Brazilian acquisition revenue contributions, transaction expenses, lower margins and higher tax rates on 2H26F and FY26F earnings.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 300015.SS

  Covered company; A-share stock of Aier Eye Hospital.

  Strengths

  A leading ophthalmic hospital group in China with substantial scale and coverage across mainland China, Hong Kong, the United States, Europe and Southeast Asia; strong annual outpatient volume and medical service capabilities; a higher proportion of premium surgeries supports pricing improvement.

  Weaknesses

  2Q26F profit is weighed down by tax payments, higher other expenses and a decline in gross margin; the Brazilian acquisition target has a lower margin and involves transaction expenses.

  Comparison

  The FY26F revenue forecast is 2% above Bloomberg consensus, while the earnings forecast is 12% below consensus, indicating that Nomura is more optimistic on revenue but more cautious on profit.

  Risks

  Further valuation premium compression, deterioration in the macro environment, medical accidents, goodwill impairment and weaker-than-expected acquisition integration.

Key data

• 2Q26F revenueCNY5.8bnExpected to grow 6% YoY, below the Bloomberg consensus of CNY5.96bn.
• 2Q26F attributable net profitCNY487mnExpected to decline 51% YoY, mainly due to higher other expenses and taxes.
• 2Q26F gross margin48.0%Down 0.9 percentage points YoY.
• 2Q26F operating margin23.8%Expected to remain flat YoY, benefiting from a lower operating expense ratio.
• 2H26F revenueCNY12.6bnExpected to grow 16% YoY, including approximately CNY500mn in revenue contribution from the Brazilian acquisition.
• 2H26F net profitCNY1.6bnExpected to grow 33% YoY, supported by a low base but weighed down by the lower margin of the acquisition target, transaction expenses and a higher tax rate.
• FY26F revenue forecast adjustment+1.1%Raised due to revenue contributions from the Brazilian acquisition.
• FY26F earnings forecast adjustment-13.5%Lowered mainly due to the impact of tax payments.
• Target priceCNY13.13Lowered from CNY13.32, while the Buy rating is maintained.
• Current priceCNY9.08Closing price on July 30, 2026.
• Implied upside+44.6%Calculated based on the target price and current price.
• FY26F fully diluted EPS valuation26.1xThe stock currently trades at 26.1x FY26F fully diluted EPS, with EPS of CNY0.35.

Impact & implications

The main investment implication is that short-term earnings are significantly disrupted by tax-related effects, leading to lower full-year earnings forecasts and target price; however, revenue remains resilient, overseas acquisitions provide incremental revenue, and profit growth is expected to recover on a low base in 2H26F. The maintained Buy rating indicates that Nomura still sees substantial upside from the current price relative to DCF fair value.

Risks

• Further narrowing of the valuation premium could limit realization of the target price.
• Deterioration in the macro environment could affect healthcare consumption demand and market risk appetite.
• Any medical accident could damage the brand, operations and valuation.
• Goodwill impairment risk could weigh on profit and investor confidence.
• The Brazilian acquisition target's lower margin, transaction expenses and higher tax rate could reduce the profit contribution from the acquisition.

What to watch

• Actual 2Q26F revenue, gross margin, operating margin and tax recognition.
• The final impact of tax payments on FY26F earnings and cash flow.
• Whether 2H26F revenue growth on a low base can reach the forecast of 16%.
• Revenue contribution, margins and integration progress of the Brazilian ophthalmic services group acquisition.
• Patient traffic, pricing and revenue growth across the three major businesses: refractive, cataract, and examination and treatment.
• Valuation premium, relative performance versus the CSI 300, and market risk appetite for the healthcare services sector.