Investment summary
The two major sectors went hand in hand, and the company's performance growth rate in the first three quarters of 2023 was impressive. The company was founded in 2003, landed on GEM in 2015, and expanded its business into the field of rehabilitation medical equipment through the merger and acquisition of Longzhijie in 2017. After the integration was completed, the company established a “integrated two-wing, two-wheel drive” development strategy and is committed to becoming a service provider in the field of health. Currently, the company's business covers two major segments: intelligent manufacturing business and rehabilitation medical equipment business. 2023Q1-3 achieved revenue of 928 million yuan, an increase of 33.57% year on year, and realized net profit of 128 million yuan, an increase of 69.68% year on year, showing impressive performance.
A leader in pharmaceutical biointelligent manufacturing, “field expansion” and “intelligence” have become the future development direction. Since its establishment, the company has focused on the field of pharmaceutical biointelligent manufacturing. It is an early market pioneer in this field. After nearly 20 years of development, the company has gradually established a leading position in the segment with advanced technology, rich products and a deep understanding of pharmaceutical processes. Thanks to business model upgrades to improve project service capabilities and strong ability to undertake large-scale projects; 2023H1's intelligent manufacturing business revenue increased 53% year-on-year. In order to improve the industrial layout, the company expanded the industrial chain horizontally to the fields of chemical synthesis, traditional Chinese medicine and plant extraction. In 2022, the chemical synthesis business signed more than 180 million yuan in new orders, an increase of more than 83% over the previous year; the service content was extended vertically to the fields of formulation production and intelligent packaging. At the same time, the company attaches great importance to R&D investment in the field of information technology and continuously develops new products.
The dual approach of endogenous and epitaxial layout lays out the field of subspecialty rehabilitation and actively sinks into the grassroots market. Long Zhijie is an innovation-leading enterprise in the rehabilitation medical device industry. As of 2023H1, the company's products have entered more than 5,000 domestic medical institutions, exported to more than 30 countries around the world, and many products have obtained CE and FDA certification. In 2020, Long Zhijie used the level-II hospital market as the main development goal to increase sales staff coverage in the primary care market in counties and townships. The sales amount of level-II hospitals increased significantly in the overall sales amount. 2021 was the first year of development of the company's rural division and a year of breakthrough progress in market development; during this period, several township health hospital projects were launched and put into operation. 2022 was a year of rapid development for the rural division. The company actively cooperated with primary health associations, rural health associations, etc., to continuously increase brand awareness, and the success rate of implementation projects reached 100%.
Investment advice
Based on the company's 2023 performance forecast, we expect the company's net profit to be 34.73%/31.28%/26.79% year-on-year increase, and PE corresponding to the closing price on February 22, 2024 will be 21/16/13 times, respectively; the first coverage gave it an “increase” rating.
Risk warning
Market competition increases risk; risk of technology development and new product development; risk of talent shortage.