Event: recently, Xiangyu Medical released its 2023 semi-annual report. In the first half of 2023, the company achieved an operating income of 335 million yuan, an increase of 51.55% over the same period last year; a net profit of 108 million yuan, an increase of 169.00% over the same period last year; a net profit of 95 million yuan, an increase of 269.41% over the same period last year; and a net operating cash flow of 101 million yuan, an increase of 450.10%.

The company attaches importance to R & D investment, and R & D results continue to show: in the first half of 2023, the company's R & D investment was 47.46 million yuan, accounting for 14.18% of income. The company continued to increase R & D investment and product R & D efforts, and the overall R & D strength was further improved. By the end of the reporting period, the company had 456 R & D personnel, accounting for 26.40% of the company's total employees. During the reporting period, the company made continuous breakthroughs in core technologies such as patents and obtained a total of 1436 patents, including 46 invention patents and 197 authorized patents, including 15 invention patents. The company added 52 medical device registration certificates / record certificates, and obtained a total of 293 medical device registration certificates / record certificates, greatly enriching the company's product range.

Profit forecast and valuation: as the leader in the field of rehabilitation medical devices in China, the company is one of the few enterprises with a full range of R & D and production capacity of rehabilitation medical devices in China. full product line + strong sales ability to build a deep moat for the company, is expected to further consolidate its own advantages in the future. We have adjusted our profit forecast for the company, and we expect the EPS of the company from 2023 to 2025 to be 1.38,1.66,2.05 yuan respectively, corresponding to the closing price on August 21, 2023, with a price-to-earnings ratio of 28.1,23.4 and 18.9 times respectively, maintaining the "overweight" rating.

Risk hints: the risk of product sales falling short of expectations, the risk of intensified competition in the industry, and the risk of policy changes related to the industry.