Incidents: The company released its 2022 annual report, achieving operating income of 2.49 billion yuan, a year-on-year decrease of 6.9%; net profit attributable to shareholders of the parent company was 890 million yuan, a year-on-year decrease of 25.7%; net profit returned to the mother after deduction was 82 billion yuan, a decrease of 27.7% over the previous year. Furthermore, the company announced the Striver 1 employee stock ownership plan at the same time. It plans to raise no more than 150 million dollars for the shareholding plan through a 1:1 ratio between employee self-raised funds and the company's incentive fund.
Affected by the epidemic, dealer supply, and internal marketing reforms, the company's performance is under pressure. On a quarterly basis, the company achieved operating revenue of 7/8.6/47/4.7 billion yuan (+20%/+41%/-20.6%/-47.9%) and net profit of 3.4/4/1.3/16 million yuan (+18%/+23%/-48%/-95.2%). The decline in company performance in Q4 alone was mainly due to the impact of the post-liberalization epidemic. In terms of profitability, the company's gross margin in 2022 was 82.3% (-2.6pp) mainly due to rising product costs and changes in product structure. The sales expenses ratio was 28.1% (+5.75pp), mainly due to rising wages and welfare expenses. The management expenses ratio was 5.6% (+0.7pp), which remained stable. The R&D cost rate is 10.2% (+3.7pp). The main reason is that the company increased investment in R&D and invested in the construction of the Jianfan Research Building as an R&D base integrating the company's blood perfusion device R&D and blood purification consumables evaluation and testing. Combining the above factors, the company's net interest rate in 2022 was 35.4% (-9.3pp).
Blood purification equipment and critical care products performed well. By product, the sales revenue of the company's nephrology and hepatology-related products declined markedly compared to the same period last year. Sales of critically ill related products achieved good performance. Consumable products related to the critical illness sector (namely HA330, HA380 and CA series) achieved sales revenue of 229 million yuan (+32.5%) in the domestic market, of which HA380 achieved sales revenue of 140 million yuan in the domestic market, an increase of 112.5% over the previous year. The DX-10 blood purifier, the “fist product” of blood purification equipment, achieved revenue of 190 million yuan (+182%).
Publish employee stock ownership plans to enhance employee motivation. In order to stimulate employees' sense of ownership, enhance employees' cohesion and company competitiveness, enhance the company's operating efficiency, and enhance the company's value, the company issued an employee stock ownership plan. The total number of employees to participate in the employee stock ownership plan will not exceed 110, including 8 directors (excluding independent directors), supervisors, and senior management, and no more than 102 other employees. The assessment target is a cumulative net profit of 3.6 billion yuan in 2023-2025. In the second vesting period, the cumulative net profit for 2023-2027 reached 7 billion yuan.
Profit forecast: Net profit of the mother for 2023-2025 is estimated to be 1.19 billion yuan, 1.43 billion yuan and 1.72 billion yuan respectively. The net profit CAGR for the next three years is 24.6%.
Risk warning: risk of a single product structure; sales of hemoperfusion products falling short of expectations; risk of product price reduction.