Incidents:
The company released its 2022 report and 2023 quarterly report: in 2022, the company achieved operating income of 10.609 billion yuan (-0.47%); net profit of 2,203 million (+28.12%); net profit of the non-return mother was 2,142 million (+15.50%). In the first quarter of 2023, the company achieved operating income of 2,437 million (-4.39%), net profit of 597 million (+9.45%), and net profit of 562 million (+2.78%) after deducting non-return mother's net profit. Overall performance was in line with expectations.
Comment:
Medical devices: Innovative cardiovascular implant products have increased significantly, and innovative products have gradually entered the harvest period.
The company's medical device sector revenue in 2022 was 5.879 billion (-4.71%), which remained stable under the influence of the impact of the pandemic on surgery volume and the high COVID-19 antigen base in 2021. Excluding products related to the epidemic, revenue from conventional devices increased 35.64% year on year, and innovative cardiovascular implant products achieved a 43.60% year-on-year increase. In addition, the company's new products, including fully degradable blockers, peripheral cutting balloons, disposable pressure microcatheters, and blood flow reserve score meters, have entered the commercialization stage. As surgery volume gradually recovers, we believe the new products will enter a period of accelerated release, providing flexibility for performance growth.
Pharmaceutical sector: Overall, there has been steady growth, and continues to contribute to cash flow. The pharmaceutical sector achieved revenue of 3.438 billion (+ 5.52%). Among them, pharmaceutical revenue was 2,999 million yuan (+6.06%), and API revenue was 499 million yuan (+2.06%). The company's pharmaceutical division is closely centered around cardiovascular patients, with a rich variety of products on sale. Other products are in the market review stage, and are expected to contribute long-term cash flow to the company in the future.
Medical services and health management sector: Revenue is growing steadily, and the new business format of artificial intelligence+consumer medicine is booming. The company's medical services and health management segment generated revenue of 1,293 million dollars (+4.91%), an increase of 11.73% year-on-year after deducting COVID-related expenses. The company launched comprehensive product solutions based on artificial intelligence technology, covering the stages of disease prevention, diagnosis, treatment and rehabilitation. Furthermore, the company is actively cultivating new forms of consumer medicine, covering fields such as ophthalmology, dentistry and aesthetics, and future development can be expected.
Profit forecast and investment advice: We expect the company to achieve revenue of 114.41/137.28/15.822 billion in 2023-2025, net profit of 2,496/30.39/3.604 billion yuan, EPS of 1.33/1.62/1.92 yuan, and PE corresponding to the current market value of 18/15/12 times the current market value. Given strong optimism about the company's future business development, we maintain the “buy” rating.
Risk warning: Commercialization of new products fell short of expectations, and the decline in revenue from COVID-19 products affected profits.