Event: In the first half of 2023, the company achieved operating income of 282 million yuan, a year-on-year decrease of 4.86%; realized net profit of 62.9176 million yuan, a year-on-year decrease of 17.92%.
The gradual implementation of spinal cord collection has put pressure on the company's performance: procurement of high-value spine consumables is gradually being implemented in all provinces and cities, and the terminal admission prices of the company's products have declined. However, with the advantage of winning bids and high prices, as well as innovation in innovative patented products and treatments, the company continued to expand sales and sink channels. The number of dealers and partner hospitals continued to increase, and the number of product sales increased to a certain extent.
Strengthen medical engineering cooperation and exchanges: In the first half of 2023, the company further strengthened medical engineering cooperation and exchanges with medical institutions and clinicians, and carried out R&D, innovation and upgrading of the company's orthopedic products. The main ones include: (1) the update and iteration of general lumbar spine products, based on the world's first modular internal fixation product, implant optimization and new design of supporting tools according to clinical surgical requirements; (2) the registration and listing of intervertebral fusion devices made of novel PEEK materials, using novel PEEK materials; (3) completion of the development of novel minimally invasive spinal positioning guide products and obtaining registration certificates; (4) completion of the minimally invasive internal fixation system development project; (5) completion of the spinal orthosis, fusion device and bone cement screw internal fixation system development project.
International business progressed smoothly: In the first half of 2023, the company relied on Implanet to continue to promote the development of international business. Through R&D and medical engineering cooperation with local doctors, the company strengthened academic promotion and market development in high-end global markets, especially mainstream orthopedic markets such as Europe, the US and Australia. The company's osteoscopic ultrasonograph has obtained China's Class III medical device registration certificate, EU CE, US FDA, Brazil ANVISA, and Australian ARTG registration certification, and can be sold in Europe, the US and Australia.
Investment advice: Spine collection affects performance in the short term and helps add coverage of empty hospitals in the long term. We expect the company to achieve operating income of 697/859/1,023 million yuan and net profit of 191/240/293 million yuan in 2023-2025. The corresponding PE was 32.63/25.99/21.28 times, respectively, maintaining the “increase in weight” rating.
Risk warning: spine inventory processing falls short of expectations; demand for orthopedic surgery falls short of expectations; loss of core technical personnel.