Growth on the revenue side in Q1 exceeded expectations, and elective surgeries are still expected to continue to resume. The company achieved revenue of 649 million yuan for the full year of 2022, +9.40% year on year, and net profit of the mother was 191 million yuan, +2.39% year on year. Although the impact of the epidemic throughout 2022 was significant, the company still basically achieved its full-year goals, and its performance growth was resilient. In 2023 Q1, the company achieved operating income of 161 million yuan, +24.19% year on year; realized net profit of 35 million yuan, +4.48% year on year; realized net profit returned to the mother after deduction of 31 million yuan, +0.34% year on year. Q1 Revenue growth exceeded expectations, mainly benefiting from restorative growth in spinal surgery in February and March. Although spinal collection began to be implemented in various provinces such as Jiangsu, Yunnan, and Shaanxi in March, the company still steadfastly implemented the established sales strategy led by therapeutic innovation, and took advantage of the opportunities of increased industry concentration in the collection environment to vigorously promote market entry. Sales channels declined further, and overall surgical volume increased significantly. It is expected that as the number of elective surgeries continues to recover, annual growth is worth looking forward to. Q1 The growth rate on the profit side is slower than the revenue side is mainly due to depreciation and amortization of new plant and equipment in Taicang, Suzhou, and cost increases brought about by preparing equipment and personnel reserves ahead of schedule to cope with increased demand after collection.
Deepen the field of orthopedics, increase investment in research and development, and persist in therapeutic innovation to help long-term growth. The company's spine business is growing steadily. Group A of the national collection of all products won the bid at a relatively high price. The company will seize the collection opportunity to continuously strengthen sales expansion, actively expand new hospitals, develop new dealer cooperation, and further sink sales channels, comprehensively increase the company's market share, and drive the company's innovative therapy products to be sold in relevant hospitals. In addition, the company continued to insist on therapeutic innovation, further strengthened medical-engineering cooperation and exchanges with medical institutions and clinicians in 2022, and carried out R&D, innovation and upgrades for the company's orthopedic products, including the completion of an iteration on common lumbar back spine products, the upcoming launch of Sanyou's latest high-end spinal staple orthopedic system, the launch of the third-generation Duetto double screw for spinal deformity, approval of a new “backbone fixation system for the spine”, approval of a titanium plate fixed intervertebral fusion system, etc., continuously consolidating the advantages of innovation and development.
Innovation drives development, and new businesses help keep opening up space for long-term growth. The company's international business has made progress. The company completed the second investment payment to French Implant in 2023Q1, and will actively expand sales of the company's patented innovative products in high-end markets in Europe and the US in the future. The holding subsidiary Mizuki Tianpeng 5mm ultrasonic hemostasis knife has been approved. The ultrasonic bone knife has been admitted to more than 400 domestic hospitals, 9 provinces and cities across the country have completed price entry, and overseas has been well received by local hospitals and doctors in the European market with its obvious technical advantages, which is expected to contribute to new performance growth points. In addition, the company's new business cooperation in sports medicine and artificial bone is progressing smoothly, and it continues to expand exploration in fields such as vertebroplasty PKP bags, artificial cervical discs, bone cement and surgical positioning membranes, orthopedic biomaterials, radiofrequency ablation, spinal endoscopy, orthopedic robots, etc., providing a practical path for product expansion in various fields, and long-term growth space continues to open up.
The company is a leading orthopedic innovation enterprise. Based on a slight adjustment of revenue to the annual report, the company's earnings per share for 2023-2025 are predicted to be 0.99/1.23/1.50 billion yuan (originally 23-24 was 0.98/1.25), respectively. Based on comparable company valuations, the company was given 33 times PE valuation in 2023. The corresponding target price was 32.67 yuan, maintaining the purchase rating.
Risk warning
There are risks such as the implementation of orthopedic collection policies exceeding expectations, the repeated impact of the epidemic on operations, and the expansion of new businesses and internationalization falling short of expectations.