Incident Overview

The company released its 2022 annual report, achieving operating income/net profit attributable to the mother/net profit after deducting non-net profit of 433/185/173 million yuan, up year-on-year respectively

8.26%/10.02%/7.29%, achieving gross margins and net interest rates of 88.72%/42.80% respectively, up -0.38/0.68pp over the previous year, and the cost rate for the period decreased by 4.11pp to 42.29%, mainly due to a decrease in sales expenses of 3.54 pp to 26.99%. Among them, oral repair films/absorbable hard brain (spine) membrane patches achieved revenue of 2.07/156 million yuan respectively, an increase of 7.81%/-1.27% over the previous year.

Adhere to the hierarchical product development strategy and pursue a sustainable competitive advantage in technology

The company adheres to the “sales generation, registered generation, clinical generation, and R&D generation” product development strategy. Self-acidifying adhesives, active biological bones, and hard brain (spine) membrane patches were approved one after another, continuing to enrich and expand competitive advantages in the fields of oral cavity, orthopedics and neurosurgery. R&D expenses continued to increase. R&D expenses accounted for about 8.67% of total revenue in 2022. By the end of the year, the company had 67 patents authorized and 95 registered trademarks; in addition, the company established an industry-university-research cooperation mechanism with the Chinese Academy of Sciences, Institute of Genetics and Developmental Biology, Shanghai Institute of Silicic Acid Science, Shanghai Academy of Sciences Research institutes, etc Well-known research institutes in China have established stable cooperative relationships and continue to explore and develop in the field of regenerative medicine, providing a strong guarantee for continuing to maintain leading positions in R&D and technology.

Expand the sales network year by year and continue to strengthen increasingly professional academic promotion capabilities

Since the launch of the first product, Haiao Dental Prosthetic Film, in 2007, the company's continuously optimized talent team has achieved increasingly specialized academic promotion capabilities. It has more than 1,100 dealers nationwide. The products have been connected to the provincial network in 31 provinces (including 16 provinces with surgical filler sponges), and provincial products have been networked more than 2,340 times, an increase of about 610 products over 2021; the growing sales network has laid a solid foundation for steady sales growth, with total product sales reaching 771,600 tablets (bottles) in 2022 , a year-on-year increase of 16.83%. In 2022, the company's sales team changed the types of academic activities, participated in and hosted about 750 academic activities, maintained continuous promotion of academic activities, and continued to increase brand awareness and influence.

Investment advice

Considering the impact of procurement price cuts, etc., we lowered our 2023-2024 performance forecast. Operating revenue was lowered from 684/877 million yuan to 564/726 million yuan, a year-on-year increase of 30.2%/28.7%, and Guimu's net profit was lowered from 261/327 million yuan to 246/310 million yuan, an increase of 32.8%/26.0% over the previous year. Adding the 2025 performance forecast, realized operating income of 889 million yuan, an increase of 22.5% over the previous year, achieving net profit of 370 million yuan, a year-on-year increase of 370 million yuan, a year-on-year increase At 19.4%, the corresponding earnings per share for 2023-2025 were 1.37/1.72/2.06 yuan/share, respectively. Corresponding to the closing price of 46.21 yuan on April 11, 2023, PE was 34/27/22 times, respectively, maintaining the “buy” rating.

Risk warning

Industry policy risks such as harvesting exceeding expectations, risk of new product R&D registration, risk of concentration of major products, product quality and animal epidemic risk, etc.