Year-on-year growth of 3Q23 revenue and net profit is under pressure

The company's 9M23 operating income / return net profit / deduction of non-return net profit is RMB 1.48 million, which is-5.7%, 4.5% and 3.2% compared with last year. 3Q23 operating income / return net profit / deduction of non-return net profit 0.97, 0.38 million, compared with the same period last year,-11.4%, 24.9%, 22.4%. We believe that the decline in the number of 3Q23 surgeries and dental implants puts pressure on the sales of meninges and dental implants, so the company's revenue growth is lower than the same period last year, and the increase in various expense rates leads to further pressure on net profit growth compared with the same period last year. We estimate that the company's EPS for 23-25 years will be 1.08 Universe 1.35 Plus 1.66 Yuan. We give the company a 24-year 26x PE valuation (comparable to the company's 24-year average of 26x Wind consensus expectations), and maintain a "buy" rating corresponding to the target price of 35.01yuan.

The expense rate of 3Q23 increased year-on-year, and the gross profit margin slightly increased the company's 9M23 sales / management / R & D / financial expense rate of 25.74%, 7.22%, 10.34% and 0.17%, respectively, compared with the same period last year. The sales / management / R & D / financial expense rate was 30.32%, 8.21%, 11.15% and 0.02%, respectively, compared with the same period last year. Compared with the same period of the same period last year, the cost inputs of + 3.60/+1.16/+2.03/+0.22pct and 3Q23 have been significantly increased. The company's 9M23/3Q23 gross profit margin was 90.39% and 90.61% respectively, year-on-year + 1.66/+0.98pct, and the gross profit margin increased over the same period last year.

The income of 3Q23 dental restoration membrane is significantly affected by the decrease in the amount of dental implant surgery. We think that the amount of dental implant surgery in 3Q23 is decreasing, and the sales of dental restoration membrane is under pressure. We expect growth to resume in 24 years as the number of surgeries gradually hits bottom. Therefore, we expect the company's dental restoration film revenue to grow by 5% year-on-year in 23 years. In 24 years, on the basis of 23 years of low base, the post-harvest demand will be further released, and the year-on-year growth rate may further increase to 27%.

The new product active biological bone can be expected in the future, and the meningeal product is expected to resume growth in 24 years. The company's new product active biological bone is clinically proved to be superior to traditional bone repair materials, and compared with foreign competitive products, it is expected to reduce side effects, have obvious advantages in the first place, and have high barriers to research and development. it is a variety with great potential. In 23 years, the company has made great efforts to build a sales team to promote it, and we expect to gradually increase the amount of active biological bone in 24 years. The company won the bid for the collection of meningeal products in all provinces, but the sales of 3Q23 fluctuated due to the decline in the number of surgeries. We expect the volume of surgeries to return to normal in 24 years, with a year-on-year growth rate of 7% and a steady increase in meningeal revenue.

It is expected to benefit from diagnosis and treatment recovery and maintain the "buy" rating.

We adjust the growth forecast of each business. It is estimated that the net profit for 23-25 will be 1.95 million yuan 2.42 million yuan (the previous value is 2.04 million yuan 2.56 million yuan), which is 23% compared with the same period last year. The current stock price corresponds to PE27x/22x/18x, and the target price is adjusted to 35.01 yuan (the previous value is 41.91 yuan), maintaining the "buy" rating.

Risk hint: the progress of new products is not as expected; the volume of collected products is lower than expected.