Event: when the company announced its results for the first half of 2023, 2023H1 realized revenue of 1.28 billion (- 21.9%), net profit of 134 million (- 23.6%), net profit of 129 million (- 24.5%), income of 593 million (- 23.2%) of 2023Q2, net profit of 48 million (- 53.4%) and net profit of 47 million (- 56.8%).

23H1's performance is affected by overseas destocking + a high base of the epidemic in the first half of the year, and Q3 is expected to improve marginally: affected by the epidemic, the company has a high revenue base in the first half of 2022, which superimposed the impact of destocking in overseas markets, and 23H1's performance is under pressure. 23H1 gross profit margin is 33.3% (- 1.4pct). The sales expense rate was 9.4 per cent (almost flat compared with the same period last year), the management expense rate was 6.2 per cent (- 0.1pct), the R & D expense rate was 3.4 per cent (- 0.9pct), and the financial expense rate was 1.0 per cent (+ 1pct), mainly due to an increase in exchange gains and losses. The management of the company will step up efforts to reduce costs and increase efficiency, which is expected to promote the external inflection point of operation in the future.

Conventional product lines are still growing slightly, and overseas business is expected to bottom out in the second half of the year. In terms of business, the company continues to promote the investment and construction of diversified medical industries, and develops the medical beauty industry, active equipment + passive consumables industry and specimen collection industry through industrial extension investment and independent innovation. To strengthen the development of industrial investment, the strategic layout of "focusing on the main puncture industry and developing diversified industries" has gradually taken shape. 23H1 annual routine product line puncture nursing income 940 million yuan (year-on-year + 0.3%), the main business slightly increased; specimen collection income 120 million (year-on-year-39%); puncture intervention income 13.21 million (year-on-year-91%); medical and beauty business 21.42 million (year-on-year-6%), the income of each business line has entered the end of adjustment and recovered more flexible in the second half of the year. From a regional point of view, 23H1's domestic revenue is 1.02 billion (year-on-year-19.7%); overseas is affected by overseas destocking, with revenue of 260 million (year-on-year-29.5%), down from 22.7% to 20.5%. With the overseas destocking cycle coming to an end and orders expected to resume, overseas income is expected to recover at a high speed in the second half of the year.

Continue to expand new categories, profitability is expected to continue to improve: Kangdelai, as a small number of domestic manufacturers of the complete industrial chain of medical puncture equipment, actively expand new categories, promote product iterative upgrading, and continue to be approved overseas. 23H1, the company focuses on the development of insulin needle series, medicine package material series, safety needle series, non-needle adding series, medical beauty series, specimen collection series, specialist syringe, blood collection test series and other products; disposable injection pen needles, disposable anesthetic puncture needles and other products have been registered in China. 510k registration has been completed for safe insulin stylus, disposable syringe (PC material) and disposable aseptic injection kit; animal medical devices have completed the standard filing and started to be put on the market; and new infusion pump active equipment products have been added. Boxed syringes, needle holder blood collection needles, zero-residue syringes and other products are expected to complete overseas registration. In terms of research, iterative products such as hemodialysis indwelling needles will also be registered and listed in China one after another; in addition, the research and development of medical and aesthetic equipment products such as ultra-fine injection needles and hair follicle transplantation devices have been steadily advanced, continuously opening the company's revenue ceiling.

Profit forecast and valuation: 23H1 performance is affected by the high base of the epidemic, and Q3 performance is expected to improve marginally as overseas inventory is coming to an end. It is estimated that the company's operating income in 2023-2025 will be 2.65 billion, respectively, with a year-on-year growth rate of-15%, 20%, 18%, and net profit of 360, 000, 200, 000,

The current market capitalization is only 16-13-11 times PE; the "buy" rating is maintained.

Risk tips: the progress of new products on the market is not as expected; the promotion of new products is not as expected; overseas business expansion is not as expected; the epidemic repeatedly affects the release of consumer demand.