Overview of events
On April 25, the company released a report for the first quarter of 2022, with operating income of 867 million yuan, an increase of 28.81% over the same period last year, and a net profit of 71 million yuan, an increase of 55.67% over the same period last year.
The performance has increased rapidly, and the expense rate has declined. In the first quarter of 2022, relying on the synergy of production bases in Shanghai, Zhuhai and Wenzhou, the company continued to promote capacity expansion, strengthen the advantage of low cost, and superimposed the foundation of continuous development of overseas markets for many years. Strong demand for new products such as safety syringes / needles and pre-filled syringes is expected to continue to improve performance. At the same time, the company achieved a gross profit margin of 34.65%, a month-on-month decrease of 1.86pct, but the company reasonably managed and controlled various expenses, with an overall expense rate of 20.99%, a month-on-month decline of 0.08pct, and a decline for three consecutive months.
Innovative products gradually hit the ground, promoting the performance shift growth rate. In October, 2021, the company was approved the first registration certificate of three types of medical devices for beauty needles in China. Under the background of promoting the compliance of medical and beauty devices across the country, the company's one-time injection beauty package is based on the advantages of first-time registration and solid sales network. It is expected to help speed up the shift. In addition, new products such as safe insulin stylus, safe indwelling needle and blood collection needle are expected to be put on the market one after another this year, laying a solid foundation for iterative upgrading of the product.
The impact of the epidemic is under control, and some delayed orders are expected to be centrally confirmed in the second quarter. Since mid-late March, the COVID-19 epidemic broke out in Shanghai, which had a certain impact on the production and operation of the company. However, with the support of the government, the company has actively completed the guarantee and supply of medical materials in Shanghai, and made reasonable arrangements for production capacity and logistics dispatching. We expect Zhuhai, Wenzhou, Beilun River and other factories to meet the needs of domestic trade business in an orderly manner. In addition, as one of the key production list enterprises of the Ministry of Industry and Information Technology, the company has received greater support from the government, and the overall impact of the epidemic can be controlled, while overseas business is mainly order system, orders delayed by this epidemic are expected to be centrally confirmed in the second quarter.
Investment suggestion
We estimate that in 2022-24, the company will achieve a home net profit of RMB 3.91 million, an increase of 34.2%, 24.3%, 22.7% over the same period last year, corresponding to an EPS of 0.89, 1.10, 1.35, and 22-24, with a PE valuation of 15.57, 12.52, 10.21 times. We continue to be optimistic about the upgrading and expansion of the infusion puncture industry. As an industry leader, the company is expected to enjoy the dividend of industry expansion and upgrading by virtue of integrated industrial chain, lower cost advantages and continuous product innovation. At the same time, with the help of the industrial layout to extend the tentacles to the high-growth subdivision track, the company is expected to further consolidate its own moat and enhance the performance ceiling. Maintain a "buy" rating.
Risk hint
Risks related to industry regulation, product liability risk, exchange rate change risk, dealer management risk, product research and development risk, etc.
