Key points of investment
Performance has grown rapidly, and profitability has increased markedly. In the first half of 2023, the company achieved revenue of 206 million yuan, up 30.7% year on year; net profit of 79 million yuan, up 44.2% year on year; net profit after deducting 77 million yuan, up 33.2% year on year; of these, Q2 achieved revenue of 115 million yuan in a single quarter, up 44.3% year on year; net profit of 45 million yuan, up 63.9% year on year; rapid growth in company performance mainly benefited from the gradual recovery of medical treatment in domestic hospitals, and expansion of new overseas customers and product lines. During the reporting period, the company's gross sales margin and net profit margin were 68.8% and 38.3% respectively, up 3.5 and 3.6 pct from the same period last year; of these, the company's gross sales margin for the Q2 quarter was 67.41%, up 2.89 pct year on year; net sales margin was 38.72%, up 4.63 pct year on year, mainly due to the company's product structure, production process optimization, and the impact of exchange rate changes. During the reporting period, the company's sales, management and financial expense ratios were 11.3%, 9.6%, and -4.2% respectively, up 1.9, 0.6, and 1.7 percentage points from the same period last year; R&D expenses were 8.8%, down 0.4 percentage points.
Overseas markets continue to gain strength. In the first half of 2023, the company's overseas revenue was 102 million yuan, an increase of 42.4% over the previous year, mainly the expansion of new overseas customers (the number of new customers increased by 18%) and the increase in the cooperative product line with old customers. Specifically, revenue from North America, Europe and other markets was 305.726 million yuan, 494.612 million yuan, and 21.6644 million yuan, respectively, up 36.2%, 37.0%, and 68.7% year-on-year, respectively. In the first half of the year, the company added 15 new registration certificates in Australia, Malaysia, Canada and other countries. Among them, the company's tourniquet products with core technology have obtained FDA, CE, and domestic registration certificates, and have been sold in bulk in Europe, and can be expected.
The equity incentive target is high, demonstrating confidence in development. The company issued an equity incentive plan at the same time. The total number of restricted shares to be granted to incentive recipients was 476,500 shares, accounting for 0.823% of the company's total share capital when the draft incentive plan was announced. Of these, 391,500 shares were granted for the first time, and 85,000 shares were set aside. The total number of incentive recipients involved in the initial award was 69 people, accounting for about 12.3% of the total number of employees of the company, including company directors, senior managers, middle managers and core technical cadres; the award price was 70 yuan/share. The company's performance assessment year is 2023-2025, which is divided into two goals (A and B). Objective A:
The company's ownership coefficient is 100%, with revenue of 500 million, 675 million, and 911 million, respectively, up 35%, and 35% from the previous year; net profit was 195 million, 249 million, and 309 million, respectively, up 34%, 28%, and 24% year on year; target B: the company's ownership coefficient was 80%, and 2023-2025 revenue was 475 million, 641 million, and 865 million respectively, up 28%, 35%; net profit was 179 million, 229 million, and 284 million, respectively. The year-on-year increases were 23%, 28%, and 24%, respectively. Shortly after the company went public, it quickly launched an equity incentive plan. On the one hand, it is conducive to fully mobilizing the enthusiasm of employees, and on the other hand, it also shows the company's confidence and goal of rapid business development in the next few years.
Investment suggestions: The company's many products are industry-leading, have been widely deployed in the global market, and development prospects are promising. We expect the company's revenue for 2023-2025 to be 504/658/845 million yuan, net profit to parent to be 193/255/321 million yuan, corresponding EPS of 3.34/4.40/5.54 yuan respectively, and corresponding PE 29.45/22.35/17.74 times, respectively. Covered for the first time, giving it a “buy” rating.
Risk warning: market competition risk; policy risk; exchange rate risk, etc.