The company released its three-quarter report for 2023, showing significant improvements in Q3 performance over year and month on month.
(1) In the first three quarters of 2023, the company achieved revenue of 1,486 billion yuan, a year-on-year decrease of 26.64%; net profit of 423 million yuan, a year-on-year decrease of 51.5%; net profit after deducting non-return net profit of 400 million yuan, a year-on-year decrease of 50.67%.
(2) In the third quarter of 2023, the company achieved revenue of 474 million yuan, an increase of 0.5% over the previous year, an increase of 7.8%; net profit of 146 million yuan, an increase of 16.6% over the previous year, an increase of 80.5% over the previous year; net profit after deducting non-return net profit of 140 million yuan, an increase of 17.26% over the previous year, an increase of 92.86% over the previous year.
Q3 The company's cost side showed an optimization trend. The R&D expense ratio increased, and the sales expense ratio and management expense ratio both declined markedly.
(1) In the first three quarters of 2023, the company achieved a gross profit ratio of 80.66%, a year-on-year decrease of 2.62 pct; a net profit margin of 28.29%, a year-on-year decrease of 14.61 pct; and an R&D expense ratio of 11.87%, an increase of 3.86pct over the previous year.
(2) In the third quarter of 2023, the gross profit margin was 80.9%, down 0.7 pct year on year, up 0.18 pct month on month, and remained basically stable; net profit margin was 30.65%, up 4.5 pct year on year, up 12.46 pct month on month. Looking at the cost-side split, the sales expense ratio of 2023Q3 was 24.79%, down 13.12pct from month on month, and the management expense ratio was 8.39%, down 1.9pct from month on month.
The optimization on the cost side also reflects to a certain extent that the company's channel inventory has maintained a downward trend and continued to improve.
The company's systematic marketing reforms, which began in 2022, have now begun to bear fruit.
Beginning in 2022, the company comprehensively promoted management reforms. In terms of team building, the company has comprehensively upgraded its organizational structure, established a “provincial and regional responsibility system” to achieve flat management; optimizes the talent team structure, streamlines government, and optimizes resource investment; changes assessment incentives, focuses on use and removal of inventory; strengthens training and empowerment, and continues to promote the professional transformation of the sales team. As of the interim report, the company has a total of 2,603 employees, a decrease of 697 over the same period last year, including 1,091 marketing personnel and 565 R&D personnel. In terms of informatization construction, the company implements refined management through IT means, realizes cloud access, usage and empowerment in the digitization of business processes, etc., and uses Internet technology to create a chronic disease management platform to provide patients with value-added services throughout the life cycle. The current month-on-month and year-over-year improvements in the company's performance prove that the reform strategy has begun to bear fruit. As a series of transformation measures gradually come into effect, the company's subsequent performance is expected to return to a growth path.
Investment advice:
Buy a -A investment rating, with a target price of 29.79 yuan for 12 months. We expect the company's revenue growth rates from 2023 to 2025 to be -19.2%, 28.4%, and 21.7%, respectively, and net profit growth rates of -32.3%, 33.2%, and 27.2% respectively; maintaining the investment rating given buy-A, the target price for 12 months is 29.79 yuan, which is equivalent to the dynamic price-earnings ratio of 30X in 2024.
Risk warning: the impact of hospital policies; uncertainty in overseas markets; uncertainty in new product development and promotion.