Results for the third quarter continued to grow, and the profit side grew faster than the revenue side. In the first three quarters of 2023, the company achieved operating income of 1,745 million yuan (+15.42%), net profit of 387 million yuan (+70.31%), net profit of 387 million yuan (+74.43%) after deducting non-return net profit of 377 million yuan (+74.43%). Among them, 23Q3 had quarterly revenue of 598 million yuan (+8.41%), net profit of 122 million yuan (+19.70%), net profit from net income of 119 million yuan (+22.29%) after deducting non-return net profit of 119 million yuan (+22.29%). The growth rate of the company's performance in the third quarter slowed down, mainly due to the impact of industry restructuring on the domestic business and faster growth on the profit side, mainly due to significant cost reduction and efficiency gains, and the high share payment costs for the same period in '22.
Domestic business fluctuates in the short term, and overseas business is growing rapidly. By region, the company's domestic market sales revenue for the first three quarters was 1,023 billion yuan (+9.12%) and international market sales revenue was 723 million yuan (+25.71%). Domestic business fluctuated, mainly due to the pace of new product promotion being affected by industry restructuring. Overseas business maintained relatively rapid growth, mainly due to the continuous expansion of overseas channels and the promotion of its own brands.
Achievements in cost reduction and efficiency have been remarkable, and profit indicators have improved across the board. The company's gross profit margin was 64.04% (+3.39pp) in the first three quarters of 2023, and the increase in gross margin was mainly due to the increase in the sales share of high-margin products; sales expense ratio of 21.93% (+1.57pp), management expense ratio of 12.97% (-4.26pp), R&D expense ratio of 5.88% (-2.17pp), financial expense ratio -3.62% (-0.34pp), four fee rates of 37.15% (-5.20pp), significant reduction in cost ratio; net profit margin of 22.15% (+7.14pp), net profit margin of 22.15% (+7.14pp), non-return to net net The profit rate is 21.63% (+7.32pp), the share of high-margin products has increased, the fee control effect is remarkable, and the company's profitability continues to improve.
Investment advice: Overseas business continues to expand, domestic business is expected to gradually improve and maintain the “increase in holdings” rating. Considering the impact of industry restructuring and lowering the profit forecast, the estimated revenue for 2023-25 is 23.8/30.3/38.5 billion yuan (originally 25.0/31.8/4.0.7 billion yuan), a year-on-year growth rate of 20.2%/27.4%/26.9%, net profit of 4.9/6.4/8.3 billion yuan (originally 4.9/6.4/850 million yuan), a year-on-year growth rate of 49.6%/30.0%/29.1%, corresponding to the current stock price of PE = 35/27/21x.
The company is a leading domestic producer of endoscopic medical consumables. It maintained a certain level of growth in the third quarter alone against the backdrop of industry restructuring. We are optimistic about the continued improvement of domestic business after the subsequent overseas release of the new product EyeMax and the slowdown in industry restructuring.
Risk warning: risk of R&D failure; risk of exchange rate fluctuations; risk of new product release falling short of expectations.