Event: The company released its 2023 three-quarter report.
(1) In the first three quarters of 2023, the company achieved revenue of 6.663 billion yuan, an increase of 30.23% over the previous year; net profit of 2.191 billion yuan, an increase of 92.93%; net profit after deduction of 1.67 billion yuan, an increase of 74.09% over the previous year. Looking at the third quarter alone, the company achieved revenue of 1,683 million yuan, an increase of 7.65% over the previous year; net profit of 697 million yuan, an increase of 100.4% over the previous year; net profit after deducting 415 million yuan, an increase of 29.87% over the previous year. The growth rate of the parent end of the current period was significantly faster than the revenue side. The main reason is that there was asset disposal income of about 542 million yuan in the current period, due to the acquisition and storage of land under the name of the Shanghai Hongkou District Land Development Center.
(2) In the first three quarters of 2023, the company achieved a gross profit ratio of 51.57%, an increase of 4.7 pct over the previous year; a net profit margin of 32.67%, an increase of 10.83 pct over the previous year; and a net profit margin of 25.1%, an increase of 6.3 pct over the previous year. In the third quarter of 2023, gross profit margin was 51.24%, up 5.2 pct year on year; net profit margin was 41.3%, up 19.45 pct year on year; net profit margin was 24.66%, up 4.2 pct year on year.
The business developed in a balanced manner, the blood sugar sector performed brilliantly, and the sensory control sector actively promoted track expansion.
According to the company announcement, 2023Q3, the company's three categories of oxygen concentrators, ventilators, and atomizers all maintained steady growth. The diabetes care sector (BGM, CGM) has shown an accelerated development trend. Since the promotion of the new CGM product CT3, which does not require calibration for 14 days, the sales trend has been good, and it has received good market feedback. It is expected that the company's CGM line will also launch related new products next year. At the same time, the company's next-generation CGM products are already applying for CE MDR certification. The promotion of registration matters is expected to promote the expansion of the company's blood sugar product export business. The disinfection sensor control business has declined from the high base in the same period last year. The company continues to promote the expansion of new specialty tracks in hospitals, such as endoscopy room disinfection, surgical instrument disinfection, etc. At the same time, it has also launched a variety of consumer disinfection products on the civilian product line.
The company announced the 2023 employee stock ownership plan, demonstrating confidence in long-term development.
In September 2023, the company announced the latest employee stock ownership plan, with a total share of no more than 107.79 million shares. The total number of shares transferred is expected to be no more than 6,230,167 shares, accounting for about 0.6215% of the company's current total share capital. Participants included company directors, supervisors, senior managers, middle managers and other core employees. A total of no more than 150 people, including 16 company directors, supervisors, and senior managers. In terms of assessment goals, based on the average net profit value from 2021 to 2022 (about 1,539 billion yuan), the 2023-2025 net profit growth rates are not less than 30%, 32%, and 52% respectively, that is, the corresponding amounts are 2 billion yuan, 2.03 billion yuan, and 2.34 billion yuan respectively, demonstrating the company's confidence in the long-term steady growth of the main business.
Investment advice:
Buy a -A investment rating, with a target price of 44.34 yuan for 12 months. We expect the company's revenue growth rates from 2023 to 2025 to be 18.9%, 14.2%, and 15.1%, respectively, and net profit growth rates of 55.5%, -10.4%, and 17.3% respectively; maintaining the investment rating given buy-A, the target price for 12 months is 44.34 yuan, which is equivalent to a dynamic price-earnings ratio of 20 times that of 2024.
Risk warning: policy impact of medical equipment procurement; uncertainty in new product development and promotion; uncertainty about subsequent orders.