Events: The company released its 2023 three-quarter report. In the 2023 Q1-Q3, the company achieved operating income of 330 million yuan (+67.1%); net profit of 71.77 million (+272.1%); net profit of 63.15 million (+402.9%) after deducting non-return net profit of 63.15 million (+402.9%). In 2023, Q3 achieved operating income of 132 million yuan (+105.9%), net profit of 31.89 million (+266.0%), net profit of 31.89 million (+266.0%), and net income of 29.43 million (+503.78%) after deducting non-return net profit of 29.43 million (+503.78%).
Gross margin has increased significantly, and high-margin products continue to be delivered: capacity utilization has improved, and equipment such as glass pre-filled syringe cleaning and silicification packaging machines, glass pre-filled syringe needle insertion machines, automatic nutritional pipeline assembly machines, and disposable injection pen pre-assembly stackers have been added to continue to open up new markets. The gross margin for the third quarter alone increased to 59.3% (+14.5pct). Effective cost control, sales expense ratio 5.0% (-3.1pct), management expense rate 17.8% (-10.8pct), R&D expense rate 9.4% (-3.5pct), and financial expense ratio -1.0% (+3.1 pct). Net interest rate increased significantly by 10.5 pct to 24.11%.
Pharmaceutical device combination production capacity has been expanded, downstream applications continue to expand, and growth potential is strong: Currently, high-value-added pharmaceutical device combination intelligent equipment such as pre-encapsulation and injection pens has achieved certain market results. On October 10, 2023, the company issued the “Notice Concerning the Use of Some Overraised Funds to Invest in the Construction of New Projects”. It plans to use some of the overraised capital to invest in the construction of the “Pharmaceutical Device Combination Intelligent Equipment Expansion Project with an Annual Output of 35 Units”, which is expected to further expand the production capacity of intelligent equipment for pharmaceutical device combinations, increase the company's business carrying capacity, and accelerate the import and replacement of related equipment. Orders from the main business continue to increase, and technological breakthroughs such as IVD, dialysis fiber membrane spinning wire, and insulin pens, and customers are expected to continue to expand. Considering the high demand for automated production equipment from downstream customers, it is expected that the performance for the next three years will continue to maintain a rapid growth trend.
The new contact lens business is progressing smoothly. It is planned to complete the construction of six main lines by the end of the year: 1) Registration progress: Currently, the company has submitted registration applications for three types of contact lens medical devices, and the contact lens business is in the product registration stage. 2) Production progress: The first production line built independently by the company has been able to produce hydrogel contact lens samples (transducers and color films). It is still in the stage of equipment debugging and optimization, and there are phased fluctuations in yield. 3) Production capacity planning: The company plans to build 6 main lines by the end of the year, 1 main line to achieve a yield of 80% +, and the production capacity target for a single production line is 18 million pieces/year.
Profit forecast and investment advice: The company's main business is progressing smoothly, capacity utilization continues to improve, and contact lens registration is steadily advancing, starting a second growth curve with future commercialization. Considering that the company's contact lens business is in the product registration stage and plans to complete six production lines by the end of the year, which is expected to contribute considerable revenue growth after listing in the future, we have adjusted the profit forecast level. The company's 2023-2025 revenue is 5.8/10.3/1.6 billion, respectively, with a year-on-year growth rate of 52%/76%/55%; net profit is 1.2/17/240 million, with a year-on-year growth rate of 79%/40%/42%. The corresponding PE is 37/27/19 times. Maintain a “buy” rating.
Risk warning: order confirmation falls short of expectations, overseas sales fall short of expectations, and progress in obtaining contact lens registration certificates falls short of expectations