Introduction to this report:
2023H1 performance declined due to the impact of collection in the orthopedic sector. As a platform device leader with multiple product lines, the company's long-term advantages in channels and manufacturing remained unchanged, and it maintained an increase in ratings.
Summary:
Maintain ratings to increase holdings. In 2023H1, the company achieved revenue of 6.888 billion yuan, a year-on-year decrease of 2.6%; net profit of 1,198 million yuan, a year-on-year decrease of 21.3%; excluding special projects, net profit of 1,198 million yuan, a year-on-year decline of 15.8%, and performance fell short of expectations. Considering that the impact of collection was greater than expected, the EPS forecast for 2023-2025 was lowered to 0.58/0.66/0.76 yuan (originally 0.67/0.76/0.86 yuan). The company was given a target PE of 16X for 2023. The target price was lowered by $9.26 (originally $13.4), equivalent to HK$10.12, to maintain the rating increase.
The orthopedic business declined markedly due to collection. The orthopedic business was clearly affected by collection. For joints and trauma, the orthopedic sector revenue fell by 33%, 26%, and 17% year-on-year, while 2023H1 fully implemented the price after collection was implemented, and the average price dropped year-on-year; in 2023Q2, the average price was also implemented one after another. As a result, the average price of the spine fell and the price difference between dealers had to be reduced by 33%, 26%, and 17% year-on-year respectively, even though the company's 2023H1 trauma, joint and spine surgeries increased 33%, 26%, and 17% year-on-year respectively. 100 million yuan, expected 2023H2 Collection effects continue to respond. The rapid increase in sales volume of general medical consumables after collection made up for the impact of price cuts, with 2023H1 revenue of 3,569 billion yuan (+0.6% year on year). The increase in demand from regular customers in the medicine package business made up for the decline in demand related to COVID-19 vaccines. 2023H1 revenue was 1,061 billion yuan, the same as the previous year. Interventional products and blood management businesses continued their growth trend. 2023H1 achieved revenue of 948 million yuan and 523 million yuan respectively, with year-on-year growth rates of +21% and +7%.
Channel advantages continue to strengthen, and overseas revenue is growing steadily. The company insists on sales channel integration and focuses marketing on customer development and maintenance in the core medical market. 2023H1 customers added 177 hospitals, 50 other medical institutions and 400 dealers, further strengthening channel advantages. Overseas business continued to grow steadily. 2023H1 The US, EMEA, and other overseas regions achieved revenue of 6.52, 356 million yuan, and 604 million yuan respectively, with year-on-year growth rates of +6.4%, +18.8%, and +10.4%, respectively.
The new business segment is thriving and is expected to become a new growth point. As a multi-product line platform-based device leader, the company leverages its channels and brand advantages to actively lay out new business segments. Sales and promotion of new business segments such as digital clinical nursing products, life information and support, and endocrinology all made positive progress in the first half of the year. It is expected that it will gradually develop and expand in the future, contributing considerable revenue to the company.
Risk warning: The impact of mining is greater than expected, and the development of new business sectors falls short of expectations