Incidents: The company released results for the first quarter of 2022 and 2023, achieving revenue of 3.12 billion yuan in 2022, up 0.7% year on year; Gumo's net profit of $312 million, up 6.97% year on year; 2023Q1 achieved revenue of 687 million, down 20.82% year on year; Guimo's net profit of 85 million, up 20.1% year on year; after deducting non-net profit of 82 million, up 31.22% year on year.

2022H2 was greatly affected by the epidemic, with actual profit exceeding 330 million: in the first half of 2022, the company had some epidemic-related products, and the performance was good. In the second half of the year, Q4 was affected by the epidemic and fluctuations in overseas markets. Demand for conventional medical products weakened, promotion of medical and aesthetic products was blocked, and performance was average; in 2022, the company's asset impairment loss was 031 million (calculated entirely at once), showing a certain degree of performance resilience. Looking at business segments, '22 is the final year of the company's medical diversification and symbiosis strategy phase. Over the past three years, the company has further promoted investment and construction in medical diversified industries. Through industrial outreach investment and independent innovation, the medical and aesthetic industry, active device+passive consumables industry, and specimen collection industry have been developed to strengthen industrial investment and development. The strategic layout of “focusing on piercing the main business and developing diversified industries” has gradually taken shape. Specimen collection revenue in '22 was 490 million (+84.4% year on year), achieving rapid growth; conventional product line puncture care revenue was 1.94 billion (-0.48% YoY), and puncture intervention revenue was 160 million (-62.29% YoY). Diversified strategies increased new revenue growth points and continued to improve the stability of the company's performance.

2023Q1's performance quickly resumed growth from a high base in the same period last year. Rapid growth in full-year performance can be expected: 23Q1 saw a 21% decline in net revenue, a 20.1% increase in net profit, and a 31.22% increase in net profit after deducting non-net profit. The apparent decline in revenue was mainly due to subsidiary Kendley's exit. As domestic medical volume continues to recover and demand for consumer products is released, it is expected that the domestic market will continue to grow rapidly, and overseas growth is expected to resume quarter by quarter.

In terms of profitability, the company's products continue to expand into the specialty and consumer sectors, driving continuous optimization of profit margins. The net profit margin of 23Q1 returned to the mother reached 12.3%. Compared with the full year of 2022, an increase of 2.4 pct is obvious.

Continuing to expand new categories, profitability is expected to continue to increase: as one of the few manufacturers of medical puncture devices in China with a complete industrial chain of medical puncture devices, Kandler actively expands new categories and promotes product iterative upgrades. High-margin safety puncture devices, medical and aesthetic equipment, animal puncture devices, etc. are listed one after another, which will continue to provide growth points for the company's revenue and increase the company's profit margin level; in addition, revenue from the company's new categories of medical and aesthetic products will exceed 60 million in 2022, and can be expected to exceed 100 million yuan for the full year of 23; in addition, the slipper-type safety island injector and pancreatic injectors, etc. are being launched one after another. Safe syringe, sterile for single use Overseas registration of products such as syringes with safety needles and pens and needles with safe disposable insulin has been approved. Single-use sterile injection bags, boxed syringes, disposable biopsy needle series, and disposable safety needles have been submitted for registration. Approval for the first half of 2023 will continue to expand the company's performance ceiling.

Profit forecast and valuation: 2022 performance was affected by the pandemic, 2023Q1 performance recovered rapidly, and annual profits of 400 million dollars may be expected. The company's revenue for 2023-2025 is expected to be 3.75/ 44.8/5.33 billion, respectively, with a year-on-year growth rate of 20.3%/19.4%/19.0%; net profit of 4/49/ 590 million, with a year-on-year growth rate of 29.3%/20.9%/20.3%.

The current market value of 6.4 billion corresponds to PE only 16/13/11 times; maintaining the “buy” rating.

Risk warning: The launch of new products fell short of expectations; promotion of new products fell short of expectations; overseas business expansion fell short of expectations; the epidemic repeatedly affected the release of consumer demand.