Investment logic: 1) Focus on women's health, compound growth of nearly 30% in 4 years, and equity incentives inject high growth momentum; 2) 60 billion Chaoyang rehabilitation equipment circuit, concentration enhances high growth potential; 3) Post-epidemic recovery+ new product releases accelerate the return to high growth; 4) Continuously expand new categories based on pelvic floor rehabilitation, electric stimulation, magnetic stimulation (autonomy), reproductive rehabilitation, sports rehabilitation and nutrition management products are rich, continuously opening up space for growth.

The company is deeply involved in rehabilitation equipment for women, and post-epidemic recovery+the release of new products accelerates performance growth: the company is deeply involved in pelvic floor and postpartum rehabilitation, and independently develops pelvic floor and postpartum rehabilitation equipment, consumables and accessories, information technology products, etc., which are superior to the technical indicators of core products of peers. In 2018-2022, revenue CAGR reached 27.3%, and net profit CAGR reached 21.7%.

It mainly focuses on the fields of electrical stimulation and biofeedback, and also enters the field of autonomous magnetic stimulation. The company has created a comprehensive product range around female rehabilitation, and has expanded the fields of reproductive rehabilitation, sports rehabilitation, nutrition management, etc., and continues to expand the potential space for performance. New products in the pelvic floor diagnosis and treatment series and new female reproductive rehabilitation equipment continued to be launched in '22, driving steady growth in '22. It is expected that a return to a high growth trend will accelerate as rehabilitation, diagnosis, and treatment recovery after the epidemic recovers.

The rehabilitation equipment market is close to 60 billion. Pelvic floor and post-natal rehabilitation are in a period of rapid penetration: 1) Demand for rehabilitation medical care has been rising steadily under many factors such as population aging, the three-child policy, and increased residents' health awareness. According to Frost & Sullivan's forecast, the market size will reach 57.9 billion in 2022; 2) The incidence of pelvic floor dysfunction among postpartum women and middle-aged and elderly women is high, but awareness rates and treatment rates are low, which may spawn a strong potential space for pelvic floor and post-natal rehabilitation demand. Non-surgical treatments such as pelvic floor muscle training (PFMT), biofeedback electrical stimulation treatment, and uterine support are the first first-line treatments recommended by domestic and foreign guidelines. According to data forecasts from the National Bureau of Statistics and Yidu, the number of women born in China in 2020 was about 12 million, and the penetration rate of post-natal rehabilitation institutions was only 20.6%. There is still plenty of room for improvement. According to data from Tou Bao Research Institute, the postnatal rehabilitation equipment market is estimated at 7.63 billion yuan in 2020, corresponding to the 2017-2020 CAGR as high as 37.9%. The threshold for pelvic floor and postpartum rehabilitation is high. China currently has a limited number of enterprises that have obtained pelvic floor diagnosis and treatment equipment registration certificates. Compared with its peers in the field of electrical stimulation, such as Weiss Medical (21 years of electrical stimulation plus 187 million consumables), Guangzhou Shanshan, Guangzhou Longzhijie, and Henan Xiangyu, the Chaoyang rehabilitation circuit and increased concentration have spawned high growth potential for leading enterprises. 3) Reproductive rehabilitation focuses on markets such as infertility and miscarriages. According to statistics in Jin Xin's reproductive prospectus, China's infertility rate reached 17.3% in 2021, and the reproductive rehabilitation market size is predicted to reach 1,647 billion yuan; 4) In 2021, the number of patients with sports injuries in China reached about 70 million, and the market size reached 19.1 billion yuan. The potential for sports rehabilitation is promising.

Based on continuous expansion of new categories based on pelvic floor rehabilitation, strong product power+omni-channel layout promotes rapid release of multiple categories: 1) The company is deeply involved in the field of pelvic floor and post-natal rehabilitation, and has a variety of pelvic floor+post-natal rehabilitation programs to meet the diverse needs of medical grade, professional institution level, and household level customer groups. The company's pelvic floor and postpartum rehabilitation equipment is highly competitive in terms of number of channels, resolution, sampling rate, measurement range, frequency band, current pulse width, stimulation frequency, treatment mode, etc. We expect the market share of electric stimulation products to reach 18.81%. After autonomous magnetic stimulation products are marketed, they are expected to rapidly boost pelvic floor and postpartum volume; 2) The company uses the core technical foundation of postpartum rehabilitation to continuously expand new categories such as reproductive rehabilitation, sports rehabilitation, nutrition management, etc., and is expected to demonstrate the strength of reproductive rehabilitation products in the first year of market. High growth contributes to the second growth pole; 3) The company actively promoted ToB+ToC, online+offline, and domestic+overseas omni-channel layouts, fully empowering various product lines, and the momentum for performance growth is strong.

The equity incentive was 30% compound growth over 4 years, demonstrating the company's confidence in high growth: the company released a new equity incentive plan for 2023, setting targets for net profit growth of 30%, 69%, 120%, and 186% for 2023-2026, corresponding to a compound annual growth rate of over 30%. The high unlocking conditions demonstrate the company's determination for long-term development and also inject momentum into the company's growth.

Investment advice: The company focuses on women's health. The launch of autonomous magnetic stimulation products promotes rapid growth in the core business of pelvic floor and postpartum rehabilitation. At the same time, it continues to expand markets such as reproductive rehabilitation and sports rehabilitation based on pelvic floor rehabilitation. Strong product power+omnichannel layout is expected to continue to drive the rapid release of various categories. The company's 2023 equity incentive plan sets a compound growth rate target of over 30% in 2023-2026, demonstrating the company's confidence in future high growth. It is estimated that the company's revenue in 2022-2024 will be 377/501/658 million yuan respectively, up 10.3%, 32.9% and 31.5% year-on-year; the net profit of the mother is 123/146/20 million, up 3.9%, 18.5%, and 37.4% year-on-year; the corresponding PE is 33, 28, 20 times, covered for the first time, and given a “buy” rating.

Risk warning: rehabilitation diagnosis and treatment recovery fell short of expectations; sales of magnetic stimulators fell short of expectations; sales of reproductive rehabilitation fell short of expectations