The company announced its annual report on April 14. In 2014, the company achieved operating income of 425 million yuan, an increase of 4.39% over the previous year, and net profit attributable to shareholders of listed companies of 10.2 million yuan, an increase of 211.23% over the previous year, with earnings of 0.03 yuan per share, in line with our previous expectations. The company was able to reverse its losses mainly because the company transferred 60% of the shares of the Sun company, iSmartAlarm, at a price of 12 million US dollars to obtain equity transfer funds, and the Sun company Bloomsky received an investment increase of 4 million US dollars.
Key points of investment:
Domestic and international sales revenue of the iHealth series grew rapidly, and management expenses and sales expenses increased further.
Domestic and international sales revenue of the iHealth series increased 67% year-on-year in 2014, but domestic independent brands saw a slight increase in sales due to fierce competition in the industry and high online sales expenses, sales of OEM products declined.
Management expenses were 12.47 million yuan, an increase of 66.55% over the previous year, mainly due to the increase in corresponding remuneration and R&D expenses due to the increase in team personnel in Europe and the United States. R&D expenses were 41.05 million yuan, an increase of 25.85% over the previous year, mainly for hardware, application software, and the development of new mobile Internet products on the cloud.
Build a “hardware+APP+cloud service” system, expand the number of iHealth product users, accumulate user health data, and form a closed loop from hardware to service. In 2014, in terms of hardware, the iHealthAlign mobile blood glucose meter was launched in the US. At the same time, the original Bluetooth mobile internet scale and smart meter were launched as upgraded products. In terms of applications, a number of apps have been launched, but the “Aijiakang” app jointly created by Xiaomi can now be adapted to all security systems. The health management app myVitals 2.0 and the blood sugar management app Igluco-SMART 3.0 have been launched. The cloud side continues to maintain data centers and optimize storage, extraction, and analysis functions. Through expansion at the above three levels, we will continue to expand the number of product users and accumulate big health data. In 2015, the company will focus on expanding the “BtoBtoC” business, striving to achieve successful and replicable cooperation between one or two iHealth series products in China, Europe and the US without cooperation with industry institutions or medical institutions, successfully connecting iHealth series products without medical service providers, and opening up the process of personal health management and medical services.
Build a “creative space for smart and healthy living” and incubate medical and smart hardware projects. In 2014, the company's layout in the direction of mobile medicine, intelligent security and smart weather was highly recognized by the capital market, and it successfully incubated its own projects. Based on its judgment that products related to mobile medicine and smart hardware will experience explosive growth in the next few years, the company will provide entrepreneurs with a full range of services, from industrial design, system certification, trial production, and marketing promotion, to incubate mobile medical and smart hardware projects.
Maintain a “Highly Recommended” rating. Currently, the company's performance is affected by continued high market development, R&D, and sales expenses during the promotion period of the iHealth series. Short-term performance is ideal, losses were reversed only due to Sun Company's investment income in 2014, and the pressure on performance in 2015 is still strong. We expect iHealth's revenue share to rise to 50% in 2016, and break-even can be achieved at that time. EPS is expected to be -0.18, 0, and 0.05 yuan respectively in 15-17. Considering that the company is a pioneer in the mobile medical industry, its industry is expected to grow explosively. Currently, it is in a transition period from hardware business to health big data service and health management business, maintaining a highly recommended rating. Continued attention is recommended.
Risk warning: The risk of iHealth series promotion falling short of expectations, and the risk that profit levels will continue to be low due to continued increases in sales expenses and R&D expenses
