Event: the company's income in the first three quarters was 7.32 billion yuan (+ 10%), the return net profit was 580 million yuan (+ 37.8%), and the non-return net profit was 560 million yuan (+ 27.9%).

Profits grew brightly in the third quarter, while contract liabilities remained high. The company's income in the third quarter is 2.24 billion yuan (+ 1.3%), the return net profit is 120 million yuan (+ 22.9%), and the non-return net profit is 140 million yuan (+ 76%).

The revenue growth is mainly due to the income growth of medical devices and pharmaceutical equipment products, and the profit growth rate is faster than the revenue growth rate is mainly due to the company's continuous optimization of product structure and the improvement of medical device and pharmaceutical equipment revenue in the high gross margin business segment. Despite the delay in the admission of some medical equipment in the third quarter, the company is still vigorously opening up the international market, actively arranging rehabilitation tracks, and realizing further intelligent upgrading of the stock sensor control business. as of the end of the third quarter, the contract debt was 2.2 billion yuan, an increase of 150 million yuan compared with the previous quarter, and the company's new business orders continued to increase. Looking forward to the fourth quarter, the company will launch new products in the first half of the year. With the gradual recovery of the company's domestic hospital business and the expansion of overseas markets, the company's equipment and pharmaceutical equipment business will continue to grow at a high speed.

Profitability continues to improve. The company's gross profit margin in the first three quarters was 27.7%, an increase in 1.7pp compared with the same period last year, mainly because the company continued to focus on its main business, and the proportion of high-margin business equipment continued to increase. By the end of the first half of the year, the proportion of the company's medical device revenue has increased to 38%, the proportion of pharmaceutical equipment revenue has increased to 21%, and the operating performance of the medical services sector has been constantly improving. Xinhua Hospital Investment Management Co., Ltd., a subsidiary, openly solicited strategic investors in the third quarter, optimizing the governance structure, which is conducive to further improving performance. The rate of sales expenses / management expenses / financial expenses / R & D expenses in the first three quarters of the company is 9.2%, 8.8%, 0.2%, 4%, respectively, compared with the same period last year, and the company continues to control the cost.

The expansion of the international market has achieved initial results. In the first half of the year, the company's foreign income was 100 million yuan, an increase of 21% over the same period last year. The amount of newly signed contracts increased by 98% compared with the same period last year. July 2023, with Belarusian Minister of Health Pinevich, reached a strategic cooperation intention in Beijing for future cooperation in the fields of infection control, radiation diagnosis and treatment, surgical instruments and pharmaceutical equipment. In August 2023, Xinhua Medical and Huiying Medical signed a strategic cooperation agreement to carry out long-term strategic cooperation around the global business of Linear Accelerator (LINAC). New markets for surgical instruments have been developed in Chile, Iran, Vietnam, Argentina and so on.

Profit forecast and investment advice. It is estimated that the return net profit of the company from 2023 to 2025 is 720 million yuan, 890 million yuan and 1.11 billion yuan, and the corresponding PE is 15,12 and 10 times respectively.

Risk hints: risks such as lower-than-expected cost control, lower-than-expected sales of core varieties, and less-than-expected overseas business expansion.