Incident: The company released its 2022 report and the first quarterly report of 2023. It achieved operating income of 10.61 billion yuan (-0.5%) in 2022, net profit of 2.2 billion yuan (+28.1%), and net profit of non-return mother of 2.14 billion yuan (+15.5%).
The first quarter of 2023 achieved operating income of 2.44 billion yuan (-4.4%), net profit of 600 million yuan (+9.5%), and net profit of 560 million yuan (+2.8%) after deducting non-return mother's net profit
Regular business is growing steadily. On a quarterly basis, the company's revenue for the single quarter of 202Q1/Q2/Q3/Q4 was 25.5/27.8/24.3/2.85 billion yuan (-7.3%/-26.2%/+14.9%/+40.6%), and the net profit attributable to the mother was 55/ 7.2/54/39 billion yuan (-24.9%/-27.7%/+177.5%/+177.5%/+294.6%), respectively. Judging from profitability, the company's gross margin in 2022 was 62.5% (+1.5pp), the sales expense ratio was 19.2% (-0.6 pp), and the management expense ratio was 7% (-0.02pp), which remained stable. The net interest rate was 21.2% (+4.5pp), and the R&D expenses rate was 9% (+0.5pp). The revenue side of 23Q1 was mainly due to the high sales revenue base of relevant emergency detection reagents in the same period last year, while sales revenue from the hospital side of regular business fell in January 23. Excluding share payment fees and exchange losses, net profit after deducting non-net profit was $650 million (+15.6%).
Lay out consumer healthcare, and innovative device products are the driving force for growth. By business, the equipment sector's revenue was 5.88 billion yuan (-4.7%). Excluding emergency product revenue contributions, conventional device revenue increased 35.6%, revenue from traditional metal drug stents continued to decline in the coronary business, and the portfolio of innovative cardiovascular implant intervention products grew rapidly (+43.6%). The pharmaceutical sector received revenue of 3.44 billion yuan (+5.5%), of which pharmaceutical (generic drugs) revenue was 2.99 billion yuan (+6.1%), and API revenue was 450 million yuan (-2.1%). Revenue from the medical services and health management sector was $1.29 billion (+4.9%). After excluding contributions from related emergency products, regular business revenue increased 11.7% year-on-year.
The company has developed a strategic layout in consumer medicine, and has already launched products in dermatology, ophthalmology, and dentistry, which is expected to contribute to new growth points.
The pipeline of innovative products is rich, and equity incentives show confidence. In 2022, the company invested 1.28 billion yuan in R&D, accounting for 12.1% of revenue, mainly to accelerate the development of innovative products. Currently, the company's innovative product matrix is becoming more and more complete, and 26 major products are expected to be launched in the next four years. With the implementation of innovative products, the company's ability to withstand the risks of collection is stronger. Combined with the company's strategic direction of “innovation, service, nationalization, integration, efficiency and steady development”, the company is expected to lead the cardiovascular industry chain. The company launched an equity incentive plan and deducted net profit of 2.45 billion yuan from non-return mothers in 2023, demonstrating confidence in future development.
Profit forecast and investment recommendations: The company's net profit is estimated to be 25.1, 29.9, and 3.42 billion yuan from 2023 to 2025. EPS is 1.34, 1.59, and 1.82 yuan respectively, and the corresponding PE is 18, 15, and 13 times respectively. The company's share of innovative equipment continues to rise, and the effects of strategic transformation are gradually showing, maintaining the “buy” rating.
Risk warning: risk of exchange rate fluctuations, risk of policy fee control, risk of innovative products falling short of expectations, repeated impact of the epidemic.