Core views:
Performance was in line with expectations. The company released its 2023 mid-year report results, achieving revenue of 661 million yuan (YOY +15.56%), net profit attributable to parent of 220 million yuan (YOY +2.5%), net profit of non-return income of 218 million yuan (YOY +4.59%). Revenue increased revenue from major laminating stents and congenital heart disease occlusive devices. Among them, 23H1 domestic and overseas revenue increased 11.3% and 34.4% year-on-year, respectively; gross profit margin of 78.94% (YOY-0.59pp) is a change in sales structure and unit cost.
Core products continue to contribute to performance. During the reporting period, the structured cardiology business contributed about RMB 243.9 million (YOY +25.1%) in turnover, the peripheral vascular disease business contributed about RMB 362.7 million (YOY +14.6%), and the pacing electrophysiology business contributed about RMB 32.9 million (YOY -24.7%) in turnover.
The 23H1 company's expense ratio is stable. The 23H1 sales rate was 18.64% and the management fee rate was 9.34%, up 0.87 pp and 1.04 pp, respectively; the R&D rate was 17.30%, down 0.76 pp from the previous year. It is mainly due to increased investment in clinical trials, increased staff costs, and increased travel expenses.
Research and development of various products continues to advance. The ankurachimney aortic laminating stent system (including the AnkurATM Pro aortic main laminating stent system and the LonguetteTM aortic branch laminating stent system), peripheral thrombus suction catheter, and remote access catheter kit are being registered and approved in China; the aortic arch stent system (including Ankura Plus and CSKIRT) is still undergoing clinical follow-up in China; the IBSTM absorbable drug-eluting coronary stent system has completed phase III clinical enrollment in China.
Profit forecasts and investment recommendations. The company achieved EPS of 0.09, 0.12, and 0.15 yuan/share in 23-25, respectively. Considering the company's competitive pattern and position, the company was given a “buy” rating of PE 40X in 23 years, corresponding to a reasonable value of HK$3.40 per share.
Risk warning. Policy risks, new product sales falling short of expectations, and R&D falling short of expectations.