1H23's performance met our expectations
The company announced 1H23 results: revenue of 640 million yuan, +15.2% year on year; net profit of gross profit of 220 million yuan, +2.5% year on year. The results were in line with our expectations.
Development trends
All business lines are growing steadily. 1) Structural heart disease revenue was 240 million yuan, +25% year on year. Among them, left atrial occluders were +31%. We determined that the company's share ranked second in the Chinese market and number one among domestic brands. This product has already entered more than 10 provincial and municipal health insurance, and has shipped more than 20,000 units worldwide; concentric occluders are +24%. 2) Peripheral vascular revenue was 360 million yuan, +15% over the same period. Among them, aortic laminating stents were +15%, and venous venous filters were +8%. The company's room septum blocker and thorac/abdominal stent successfully won the bid in Hebei Sanming League Collection 1 and Henan Hospital Alliance Collection 2, respectively. 3) Pacing electrophysiology revenue was 33 million yuan, -25% year-on-year. We determined that the main reason was the decline in Medtronic orders. In terms of internationalization, the company's overseas revenue was 130 million yuan, +34% year-on-year. The growth rate was faster than at home, and the share of overseas revenue increased to 20%. (The growth rates in this section are all revenue measures) Innovative research and development has entered a harvest period, and we are still waiting for major products to be launched. 1) Peripheral vascular aspects: Four products, including the Aegisy venous filter, obtained CE certification, and the G-Branch thoracic and abdominal primary laminating stent and Futhrough aortic rupture system completed pre-marketing clinical enrollment. In the aortic arch program: The chimney stent is registered with the State Drug Administration, the window stent is under one-year follow-up, and three CS stents have completed FIM (first human trial) clinical enrollment. On the lower extremities: The knee medication ball and peripheral suction catheter are registered by the State Drug Administration. 2) In terms of structural heart disease: X-Clip completed the first human implantation through a catheter mitral valve clamp, and the US IDE clinical trial of a left atrial occlusion device is being actively prepared. 3) Epione, a liver cancer interventional surgery robot that the company collaborates with outside parties, was approved for listing in August this year. 4) Iron-based degradable coronary stents. RCT clinical phase 2 and single-arm multi-center clinical phase 3 completed clinical enrollment, respectively, and are being followed up. In the next 1-2 years, the company expects various products such as chimney stents, lap pills, biodegradable room separators, and peripheral suction catheters to be approved for sale. We expect the new products to continue to bring incremental performance to the company.
Profit forecasting and valuation
We keep our profit forecast unchanged, and the current stock price corresponds to 2023/24 price-earnings ratio of 27/21 times. We maintained our outperforming industry rating and target price of HK$3.21, corresponding to a price-earnings ratio of 33/26 times in 2023/24, which is 31% upward from the current stock price.
risks
R&D progress fell short of expectations, internationalization fell short of expectations, the competitive landscape worsened, and collection price reductions exceeded expectations.