Events:

The company issued a 23-year interim performance report: the company achieved revenue of 225 million yuan (- 3.0%) in the first half of the year, and realized a net profit of 110 million yuan (+ 5.5%) belonging to shareholders of listed companies. After deducting non-recurring profits and losses, the net profit attributed to shareholders of listed companies was 109 million yuan (+ 6.0%), and the overall performance was slightly lower than expected.

Comments:

Business side: revenue: 23Q1 revenue 109 million yuan (- 7.35%), 23Q2 revenue 115 million yuan (+ 1.5%), performance margin is good. The marginal improvement of the company's revenue end is mainly as follows: 1) after April 20, the planting volume in public hospitals began to grow gradually, and the industry growth continued to improve; 2) the company launched promotional activities in June to help the company achieve higher sales growth in the way of price for volume. Profit:

In the first half of the year, the company's gross profit margin was 90.3% (+ 2.0pct), net profit margin was 48.9% (+ 4.0pct), and profit margin increased steadily. The profit margin has increased slightly, mainly due to: 1) the company's operating cost is 21.78 million yuan (- 19.5%), and the sharp decline in operating cost leads to the increase of gross profit margin; 2) the company continues to steadily promote cost-reduction and efficiency measures to improve the marginal output level of employees.

Product end: on the one hand, oral repair products and meningeal products are still the company's main sources of revenue, dental restoration business is expected to return to rapid growth in the short term, and the sustained growth of dental implants leads to a steady increase in dental repair demand; on the other hand, in the long run, active biological bone is expected to become the company's second performance growth curve. 1) in the first half of the year, the revenue of oral repair membrane was 106 million yuan (- 3.6%), the gross profit was 90.3% (- 0.8pct), and the revenue of meningeal patch was 90.93 million yuan (+ 6.1%) in the first half of the year, and the gross profit was 92.7% (+ 1.3pct). We believe that the growth rate of dental implants is expected to accelerate in the second half of the year, and the company is optimistic about the expected release of oral repair film. Under the background of the collection of meningeal patch in 12 provinces in May, the marginal trend is still good, the leading effect is obvious, and the profit margin for the whole year is expected to remain stable. 2) the conversion verification of active biological bone is about to be completed, and the net price ranges from 8000 yuan to 20000 yuan (different specifications). We believe that if the final bone morphogenetic protein is grouped separately, the company's products are expected to maintain a certain profit margin and are optimistic about the expectation of the company's active biological bone production.

Profit forecast: the company has relatively sound fundamentals, remarkable cost management effect, rich pipelines of listed and under research products, oral repair film and bone powder are expected to achieve rapid growth in the second half of the year, and the collection and landing of active biological bone in the second half of the year is expected to maintain a certain profit space. Considering that the company's revenue growth in the first half of the year is lower than expected, we slightly downgrade our performance forecast. It is estimated that the 2023-2025 net profit of the company will be 2.10, 244, 2.96 million yuan, respectively, and EPS will be 1.17, 1.35 and 1.64 yuan, respectively, and the current market capitalization will correspond to 29 times / 25 times / 21 times of PE, respectively, maintaining the "overweight" rating.

Risk tips: risks such as collection, less than expected market development of new products, loss of core personnel, etc.