Incidents:
According to the company's official website, the company maintained 9 consecutive championships in the medical device industry during the 2023 Double Eleven period. Among them, several categories of products recorded the highest sales volume, including blood pressure monitors, oxygen concentrators, nebulizers, thermometers, physiotherapy devices, oximeters, wheelchairs, etc. The new product led to rapid growth in the corresponding business. The new-generation ventilator debuted on Double Eleven, with the attention of tens of millions of users across the network; sales of Endurance dynamic blood glucose meters exceeded 10 million; blood sugar meters increased by more than 30% over the same period last year. The company continued to maintain its lead in health testing and respiratory health.
Revenue in the third quarter was under slight pressure, and new products provided growth impetus
In the first three quarters of 2023, the company achieved operating income of 6.663 billion yuan, an increase of 30.32% over the previous year; net profit of 2.191 billion yuan, an increase of 92.93% over the previous year; and net profit after deduction of 1.67 billion yuan, an increase of 74.09% over the previous year. Among them, Q3 achieved revenue of 1,683 billion yuan, a year-on-year increase of 7.65%, a year-on-year decrease of 26.09%; net profit of the mother's net profit of 697 million yuan, an increase of 100.4% year-on-year, and net profit of 415 million yuan after deducting non-return net profit of 415 million yuan, an increase of 29.87% over the previous year. With the release of future third-generation ventilators and 14-day calibration-free CGM products, there is room for further improvement in the company's performance.
Expenses have been effectively improved, and gross margin has increased significantly
The gross margin of 2023Q3 company was 51.24%, +5.2 pp year over year, +0.8 pp, mainly due to lower raw material costs and changes in the product structure for new product launches; sales, management, and R&D expense rates were 14.42%, 5.34%, and 7.34% respectively, year-on-year -0.52, -1.08, -0.54 pp, optimized the company's cost management capabilities; net profit margin reached 41.31%, mostly because 2023Q3 confirmed 287 million asset disposal income, net profit margin of 24.36% after impact, same Ratio +2.5 pp.
Release employee stock ownership plans to demonstrate confidence in the company's development
The company announced a new round of employee stock ownership plans on September 13 to incentivize no more than 150 company managers and core members. The target is based on the average net profit value for 2021-2022 (1,539 million), and the 2023-2025 net profit is not less than 20.00, 20.31, and 2,339 billion yuan, respectively. The equity incentive target continues to grow, demonstrating confidence in the company's long-term steady development.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue in 2023-2025 to be 87.97/93.17/10.789 billion yuan, with growth rates of 23.87%/5.92%/15.80% respectively, net profit of 25.33/20.42/24.26 billion yuan, growth rates of 58.83%/-19.40%/18.83% respectively, 3-year CAGR of 15.01%, corresponding PE of 13/16/14 times. Given that the company is a domestic household medical device platform-based enterprise with obvious advantages in being deeply involved in the industry for many years, new products such as CGM have driven the company's performance growth. Referring to comparable company valuations, it was given 20 times PE in 2024, with a target price of 40.74 yuan, maintaining the “buy” rating.
Risk warning: New product promotion falls short of expectations; increased competition has led to product price reduction; terminal demand has declined.