Incident: The company released its 2022 annual report and the first quarter report of 2023, with revenue of 380 million yuan (+21.5%) in 2022; net profit of 70 million yuan (+4%) of return to the mother; net profit of 60 million yuan (-0.7%) after deducting non-return to the mother.
In the first quarter of 2023, it achieved operating income of 0.7 billion yuan (+40%), net profit of 0.3 billion yuan (+458%), and net profit of 100 million yuan (+662%) after deducting non-return mother's net profit.
Performance grew steadily, and share payment fees and the merger of subsidiaries affected profit growth. 1) On a quarterly basis, revenue for the Q1/Q2/Q3/Q4 quarter was 0.5/0.8/0.6/190 million yuan (+10.9%/-1.1%/-0.1%/+52%). The lower profit growth rate on the revenue side in '22 was mainly due to share payment fees and the increase in profit and loss for minority shareholders due to the inclusion of the holding subsidiary Zhejiang Weigao Automation Equipment Co., Ltd. in the scope of the merger in 2022. 2) Looking at profitability, the gross profit margin in 2022 was 50.5% (+0.3pp), mainly due to the effective cost control of some orders, and the management fee rate of 29.3% (+2pp), mainly increased Weigao Automation, Zhejiang Maidesun's subsidiaries, and gave employees equity incentives. Higher share payments and increased fixed asset depreciation amounts, the R&D expense ratio was 9.6% (-2.6pp), the sales expense ratio was 4.7% (-0.65pp), and the net interest rate was 20.1% (-0.1pp), which remained stable.
There was a high growth in connecting machines, and safe infusion products contributed to the main performance. By business, the year-on-year growth rates of the company's safety infusion connectors and blood purification connectors in 2022 were 71.2% and 2,276.3%, respectively, accounting for 60.2% and 10.5% of revenue, respectively. This was mainly due to increased orders for equipment such as disposable infusion packaging machines and assembly machines, and hollow fiber membrane spinning wire. Other categories increased 2.7% over the same period last year, mainly due to increased orders for equipment such as PCR fully automatic packaging production lines, automatic nasal spray injector assemblers, etc. In the main business, stand-alone safe infusion machines decreased by 50.5% compared to the same period last year, mainly due to higher revenue from automatic needle assembly machines due to higher demand in the vaccination market during the same period last year.
The potential business of the R&D department, pre-filled and contact lenses is expected to provide new growth points. The barriers in the medical consumables and intelligent equipment industry are high, mainly reflected in “complex subject technical background+non-standard products+rapid technological change”. The company pays great attention to research and development. Currently, it has stocked intelligent equipment with consumables such as pharmaceutical device combinations (pre-filled and insulin pens), orthopedics, IVD, etc. in the research pipeline. The company collaborated strategically with Weigao Group to hold 51% of Weigao Automation's shares in April 2022, and is expected to be deeply bound to become Weigao's consumables intelligent equipment supplier in the future.
At the same time, the company made easy strides with the establishment of a subsidiary in May 2022 to lay out the contact lens manufacturing OEM market, with huge room for growth.
Profit forecasts and investment recommendations. Net profit from 2023 to 2025 is estimated to be 100, 140, and 180 million yuan respectively. The company is a leading domestic medical consumables company. The current business is growing steadily, and incremental business is about to be launched, maintaining the “buy” rating.
Risk warning: the risk of orders falling short of expectations and the risk of volatility in the investment cycle of the equipment industry.