Core views
The growth rate of the company's 2023Q1 revenue and net profit to the mother is impressive. In the short term, the company's operations have returned to normal after the epidemic, and performance is expected to grow rapidly; in the medium term, new products in the field of reproductive rehabilitation and sports rehabilitation, such as ultrasound therapists, ultrasonic uterine rehabilitation devices, and finger joint rehabilitation evaluation systems, are expected to create the company's second growth curve; in the long run, the penetration rate of the rehabilitation equipment industry is low, and the company is expected to continue to increase its market share in the future through product strength, channels, and service advantages.
occurrences
The company released its 2022 annual report and the first quarter of 2023
The company achieved revenue of 377 million yuan in 2022, an increase of 10.32% over the previous year; net profit of Guimu was 122 million yuan, an increase of 3.00% over the previous year; after deducting net profit of non-Gimo, an increase of -14.90% over the previous year, EPS was 1.46 yuan/share.
The company achieved revenue of 109 million yuan in the first quarter of 2023, an increase of 46.34% over the previous year; net profit of Fumo was 32 million yuan, an increase of 53.60% over the previous year; after deducting net profit of 27 million yuan, an increase of 33.22% over the previous year, EPS was 0.32 yuan/share.
Brief review
The industry's recovery trend is good. The company's performance growth rate for the full year of 2022 was impressive. The company's revenue for the full year of 2022, net profit returned to the mother, and net profit after deducting non-return to the mother were 3.77, 1.22, and 89 million yuan respectively, up 10.32%, 3.00%, and -14.90%, respectively. 2023Q1 2022Q4's operating income and net profit of the parent company were $0.79 and $24 million respectively, up -29.24% and -41.56% year-on-year respectively. Considering the negative impact of the domestic epidemic at the end of 2022 on rehabilitation departments.
Split by product, the company achieved revenue of 205 million yuan (-3.22%) from pelvic floor rehabilitation products in 2022, revenue of reproductive rehabilitation products of 27 million yuan (+68.26%), sports rehabilitation products of 17 million yuan (+102.78%), revenue of consumables and accessories of 98 million yuan (-1.14%), and revenue from other products of 0.06 million yuan (+111.61%).
Under the influence of the epidemic, the company's new reproductive rehabilitation and sports rehabilitation products have still achieved rapid growth. The relevant product base is small, and the market is in a period of rapid promotion.
The 2023Q1 company's revenue, net profit, and net profit after returning to the mother were 1.09, 0.32, and 27 million yuan respectively, up 46.34%, 53.60%, and 33.22%, respectively. Market demand recovered, and revenue and net profit growth rates were impressive.
Leading pelvic floor and postpartum rehabilitation equipment, product layout gradually improved
The company is mainly engaged in R&D, production and sales of products related to pelvic floor and postpartum rehabilitation. The products mainly include pelvic floor and postpartum rehabilitation equipment (electrical stimulation, magnetic stimulation products), consumables and accessories, information technology products, etc., which are widely used in medical institutions such as obstetrics and gynecology, pelvic floor rehabilitation centers, confinement centers, maternal and child centers. China has a huge number of mothers and childbearing women. There is huge demand space for pelvic floor and post-natal rehabilitation services, and the industry is in a period of rapid growth. As an industry leader, the company has a clear first-mover advantage. In recent years, with the approval of new products such as self-produced magnetic stimulators, the product layout has been gradually improved, which is expected to gradually increase its market share.
Extending the layout of reproductive rehabilitation and other fields to provide new impetus for performance growth, China has a huge population base of infertility, miscarriages, and post-partum people, and the reproductive rehabilitation market has huge potential. Sports rehabilitation mainly targets neurological and orthopedic patients, and the population base is huge. Based on years of industry experience, technology accumulation and rich channel resources in the field of pelvic floor and postpartum rehabilitation, the company actively expanded the fields of reproductive rehabilitation, sports rehabilitation, etc., and developed products such as electroultrasound therapy devices, ultrasonic uterine rehabilitation instruments, etc. for departments such as obstetrics and gynecology, gynecology, reproductive medicine, family planning clinics, etc., which is expected to become the company's second growth curve, providing new impetus for the company's continued rapid growth in future performance.
Financial data is generally normal, and cost control is good
In 2022 as a whole, the company's comprehensive gross margin was 68.55%, a year-on-year decrease of 4.38 percentage points, mainly because the company undertook the injection molding substitution processing business for antigen self-testing products. The gross margin of this product was lower than the company's other products, thereby lowering the company's overall gross profit level; the sales expense ratio was 22.32%, up 0.74 percentage points from the previous year, mainly due to the increase in sales staff remuneration; the management expense ratio was 8.68%, up 0.36 percentage points from the previous year, mainly due to the increase in employee remuneration; the R&D expense rate was 10.97%, an increase of 0.07 percentage points over the previous year At one percentage point, it remained stable; net cash flow from operating activities decreased 14.75% year-on-year, mainly due to increased expenses for purchasing raw materials; net cash flow from investment activities was -86 million yuan (-09 million yuan in the same period last year), mainly due to the fact that purchased wealth management products did not expire and project project payments were made; net cash flow from fund-raising activities was 863 million yuan (-18 million yuan in the same period last year), mainly due to capital raised by issuing new shares. The number of accounts receivable turnover days in 2022 was 13.90 days, a decrease of 1.42 days from the previous year. The number of accounts payable turnover days was 41.18 days, a decrease of 5.50 days over the previous year, and the company's overall operating efficiency improved. The rest of the financial indicators are generally normal.
2023Q1, the company's comprehensive gross margin was 63.12%, down 10.01 percentage points from the previous year. It is expected that the share of low-margin products will increase in the short term, mainly due to changes in the product structure; the company's overall cost control is good, with a sales expense ratio of 17.55%, a decrease of 5.94 percentage points over the previous year; the management expense ratio was 9.01%, an increase of 0.15 percentage points over the previous year, which remained stable; the R&D expense ratio was 11.11%, down 0.39 percentage points from the previous year, which remained stable. Net cash flow from operating activities was $22 million (same period last year: -00.6 million yuan), and cash flow from operating activities changed from negative to positive, mainly due to the procurement of antigen self-testing services in the same period last year, while there was no related business in the first quarter of this year.
Profit forecasting and valuation
In the short term, the company's operations have returned to normal after the epidemic, and new self-developed magnetic stimulation products are expected to drive high performance growth; in the medium term, the company's traditional pelvic floor electrical stimulation and magnetic stimulation products are expected to maintain steady growth, and new products in the field of reproductive rehabilitation and sports rehabilitation such as ultrasound therapists, ultrasonic uterine rehabilitation devices, and finger joint rehabilitation evaluation systems are expected to create a second growth curve. Revenue for 2023-2025 is expected to be 493 million, 633 million and 806 million yuan respectively, up 30.89%, 28.25% and 27.43% year-on-year. The net profit of Guimu was 160 million, 209 million and 273 million yuan respectively, up 31.64%, 30.47% and 30.54% year-on-year. Based on the closing price on April 28 (46.70 yuan/share), 2023-2025 PE was 29, 22, and 17 times, respectively, maintaining the “buy” rating.
Risk warning
1) Industry competition intensifies: Currently, the market competition in the traditional electronic stimulation business is fierce. There is a price war. The growth rate of the company's corresponding products will also slow down in the future, which may even affect the company's overall gross margin level; the company's magnetic stimulation products are still maintaining high growth, but the possibility that industry competition will gradually intensify in the future is not ruled out;
2) Research and development progress falls short of expectations: One of the company's strategic goals is to gradually expand products in the field of pelvic floor post-natal rehabilitation in the future. If the development progress of new products falls short of expectations and affects the timely listing of the company's subsequent products, it may cause the company's product upgrades and iterations to slow down, and new product development and launch are lagging behind, thereby affecting the company's competitiveness in the industry;
3) The marketing of new products fell short of expectations: Currently, the products launched by the company in the reproductive rehabilitation and sports rehabilitation sector, such as uterine rehabilitation devices, ultrasound therapy devices, finger joint rehabilitation and evaluation systems, etc. are all in the early stages of marketing. If problems occur in product pricing, academic promotion, sales strategies, etc., new products may fall short of expectations, which in turn will affect the company's future revenue growth rate.