Incident: The company released its semi-annual report for 2023. In the first half of 2023, it achieved revenue of 206 million yuan (+30.70%), net profit of 78.8 million yuan (+44.16%), net profit of non-return income of 76.74 million yuan (+33.22%). In 2023, Q2 achieved revenue of 115 million yuan (+44.30%), net profit of 44.58 million yuan (+63.89%), net profit of non-attributable income of 42.62 million yuan (+37.93%). On August 16, the company announced the “2023 Restricted Stock Incentive Plan (Draft)”, which plans to grant 476,500 restricted shares to 69 incentive recipients at a price of 70.00 yuan/share.
Comment:
The macro environment has been optimized, and domestic and foreign performance has increased. Domestic outpatient diagnosis and treatment recovered rapidly, and the company's domestic business grew strongly. In the first half of the year, it achieved domestic revenue of 102 million yuan, an increase of 21.10% over the previous year. With the full resumption of domestic surgery in the second quarter, domestic revenue increased sharply by 49.35% in the second quarter. It is expected that the domestic business will maintain a rapid growth trend in the second half of the year. Overseas markets achieved revenue of 102 million yuan in the first half of the year, an increase of 42.42% over the previous year. Among them, the North American market achieved revenue of 30.57 million yuan (+36.19%), the European market achieved revenue of 49.46 million yuan (+36.96%), and the Asia Pacific and other markets achieved revenue of 21.66 million yuan (+68.68%). The company's overseas customer expansion was smooth and product recognition continued to increase. The number of new overseas customers increased 18% in the first half of the year, and the company's own brand sales increased 91.87% year on year, accounting for 20% of overseas sales.
R&D efforts continue to increase, and the marketing network expands globally. The company adheres to the “three trees” technology innovation concept. The gross profit margin in the first half of the year was 68.77%, an increase of 3.52 pct over the previous year, maintaining a high level. 2023H1 invested 18 million yuan in R&D, an increase of 24.48% over the previous year. There were 98 R&D personnel, of which more than 15% had a master's degree or above. During the reporting period, 13 new invention patents and 28 new utility model patents were applied for. The bipolar technology equipment and consumables independently developed by the company were tested in 100+ hospitals across the country in the first half of the year, and 200+ surgeries were completed. In terms of marketing, 2023H1's sales expenses were 23.31 million yuan, an increase of 56.34% over the previous year. The proportion of second-tier hospital customers and above in the domestic market exceeded 70%, and the number of new products entering hospitals exceeded 200; the number of new customers in the overseas market increased by 18%. In the future, the company will further improve the global marketing network layout, vigorously expand the South American and Asia-Pacific markets on the basis of consolidating the European and North American markets, and actively promote sales of the company's own brands.
Publish an equity incentive plan to show confidence in medium- to long-term development. The incentive plan is to grant 476,500 restricted shares at a price of 70 yuan/share to 69 directors, senior managers, middle managers, and core technical personnel (12.3% of the company's total employees). According to the equity incentive assessment criteria issued by the company, the goals for performance assessment A are as follows: operating income for 2023-2025 is not less than 5/665/911 million yuan, respectively, or net profit for 2023-2025 is not less than 195/249/309 million, respectively. The incentive plan corresponds to the operating income and net profit CAGR of 35% and 29% respectively for 2022-2025, which fully demonstrates confidence in the company's development. At the same time, it is conducive to attracting outstanding talents, fully mobilizing the enthusiasm of core employees, and promoting the long-term development of the company.
Profit forecast and investment suggestions: We expect the company's operating income to be 522 million yuan/684 million yuan/868 million yuan respectively in 2023-2025, with a year-on-year growth rate of 40.7%/31.1%/26.8%, and net profit of 199 million yuan/265 million yuan/324 million yuan, respectively, with a year-on-year growth rate of 37.5%/33.1%/22.2%, respectively. The latest closing prices correspond to 29/22/18 times PE, respectively. The company is an international minimally invasive endoscopic diagnostic and treatment device company. With its technical advantages, it continues to expand from endoscopic consumables to the device side. This year, it is actively expanding overseas markets in the face of domestic in-hospital diagnosis and treatment recovery. The company's performance is expected to continue its rapid growth trend. It is covered for the first time, and given an “increase in strength” rating.
Risk warning: new product development and certification fall short of expectations; sales fall short of expectations; collection price reduction exceeds expectations; risk of exchange rate fluctuations; risk of foreign trade friction