Incidents:
The company released its 2023 interim results report. 2023H1 achieved revenue of 47.6 million yuan, a significant increase compared to 1.05 million yuan in revenue for the same period last year; Gimu's net profit loss was 544 million yuan, and the loss for the same period last year was 463 million yuan, an increase in loss. Commercialization promotion went smoothly, and revenue was in line with expectations; the increase in loss was mainly due to a sharp increase in sales expenses due to the launch of various products, delays in many activities and corresponding expenses last year to the second half of the year, and additional one-time adjustment expenses after promoting business focus at the beginning of the year.
A number of listed core products have fully commenced commercialization
The commercialization of the company's multiple products progressed smoothly in the first half of the year. Among them, the core product, Tumai endoscopic robot, has achieved commercial installation with 4 units and won bids at many of the top three hospitals; the Honghu Orthopedic Surgery Robot completed its first commercial installation in China, and is also the company's first surgical robot product to go overseas. Through collaboration and cooperation with Minimally Invasive Group, it continues to promote overseas commercialization, contributing overseas revenue to the company for the first time; Dragonfly Eye electronic laparoscopy has achieved steady growth with a good commercial foundation. As the number of surgeries on the company's products continues to increase, clinical recognition has gradually increased. Up to now, Tumai has completed more than 1,200 clinical surgeries, more than 500 in the first half of the year alone, and Honghu has accumulated more than 600 total knee replacement surgeries, which is at the leading level in the industry.
Continuously strengthen R&D innovation and focus on core R&D projects
The company promoted business focus in early 2023. R&D expenditure in the first half of the year was 312 million yuan, a year-on-year decrease of 7.35%.
Development and registration of major products are progressing well: Honghu has rapidly expanded its global footprint. Since last year, it has been continuously approved for listing in China, the United States, the European Union, Brazil and Australia; the new generation Dragonfly Eye obtained an NMPA product registration certificate and CE certification in the first half of the year; the international cooperation product Mona Lisa was approved for NMPA product registration in May 2023, making it the first domestic prostate puncture robot certified in the field of urology. At the same time, the company continues to strengthen breakthrough exploration of cutting-edge technology, and has completed more than 50 5G remote surgeries, setting an academic benchmark worldwide.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2023-25 to be 228/6.15/1,399 million yuan respectively, with a year-on-year growth rate of 955.59%/169.52%/112.91%, a 3-year CAGR of 292.73%, corresponding PS of 74/27/13 times, respectively; the company's R&D and marketing investment is high, and we expect the company's net profit to be -869/-6.10/-315 million yuan respectively in 2023-25. Considering that the company is in the early stages of commercialization, it is difficult to achieve profit in the short term, but there is a lot of room for long-term growth, we used DCF to value the company. The target market value is 26.2 billion yuan. According to the HKD exchange rate of 0.93 billion yuan on August 30, 2023, the corresponding market value is HK$28.3 billion, and the target price is HK$2,949, maintaining the “buy” rating.
Risk warning: New product development failed; marketing fell short of expectations; increased competition led to price drop