Brief comment on performance

On July 31, 2023, the company released its half-yearly report for 2023. In 2023, H1 Company realized an income of 225 million yuan (- 3.0%, year-on-year, the same below); its net profit was 110 million yuan (+ 5.5%); and its non-return net profit was 109 million yuan (+ 6.0%).

From a quarterly point of view, the income of Q2 company in 2023 is 115 million yuan (+ 1.5%), the return net profit is 56 million yuan (+ 15.0%), and the non-return net profit is 56 million yuan (+ 15.9%).

Business analysis

The main products maintain a high gross profit margin, and the winning products are expected to continue to sell. In 2023, the income of H1 company's oral repair membrane products was 106 million yuan (- 3.6%), and the gross profit margin was 90.34% (- 0.76pcts). The income of absorbable dura mater patch products was 91 million yuan (+ 6.1%), and the gross profit margin was 92.73% (+ 1.35pcts). Under the condition that the gross profit margin of the main products remains high, the overall gross profit margin of H1 company in 2023 is 90.3% (+ 1.99pcts). In June 2023, the company successfully won the bid in the continuous procurement of artificial dura mater patches carried out in Jiangsu Province; in July 2023, according to the "notice on the results of selection of centralized belts of patch medical supplies in the inter-provincial alliance" issued by the Liaoning Provincial Medical institutions and Medical consumables Purchasing Alliance, the product was selected in the inter-provincial alliance procurement.

The sales cost side continues to improve, and the R & D side investment increases. In 2023, the sales expense rate of H1 company was 23.7% (- 2.3pcts), the management expense rate was 6.8% (+ 0.3pcts), the R & D expense rate was 10.0% (+ 2.9pcts), and the net interest rate was 48.9% (+ 3.95pcts). The company attaches importance to research and development, and applications for registration of phosphate etching agents, light-cured composite resins and bioremediation membrane products have been accepted; clinical trials of calcium-silicon bioceramic bone repair materials have been successfully completed and key progress has been made. The first case of uterine cavity repair membrane was randomly divided into the group and officially entered the clinical trial.

Earnings forecast, valuation and rating

With the dental implant collection policy on the ground and the collection of absorbable dura mater patch winning the bid one after another, the company's two main products are expected to continue to sell. It is estimated that the company's net profit from 2023 to 2025 will be 2.41 million yuan, 323 million yuan, respectively, up 30%, 34% and 29% from the same period last year. The company's current price is 26, 19, and 15 times that of PE, maintaining the "overweight" rating.

Risk hint

Industry policy risk; market competition risk; R & D registration is less than expected risk; shareholder pledge, reduction risk.