Key points of investment
Incident: The company released the “Double Improvement of Quality and Return” action plan on March 8, 2024. In order to protect the interests of all shareholders of the company, enhance investor confidence, and promote the long-term health and sustainable development of the company, the company formulated the “Double Improvement of Quality and Return” action plan. It includes five initiatives, including focusing on the main business, continuing to innovate, building a global network system, consolidating governance, and focusing on returning investors.
Focus on the main business and create heavy equipment for medical devices in China. The company insists on being rooted in industry, deepening its main business, and becoming professional. On the basis of cornerstone businesses such as blood pressure testing, temperature testing, traditional Chinese medicine equipment, and surgical instruments, the company focuses on the continuous expansion of the three core tracks of respiratory treatment, diabetes care, and infection control, and actively incubates high-potential businesses such as first aid, ophthalmology, and intelligent rehabilitation.
Persist in innovation and continue to consolidate and enhance the core competitiveness of products. In 2022, the company invested 496 million yuan in R&D, accounting for 6.99% of revenue, an increase of 16.62% over the previous year. In recent years, the company's continuous glucose monitoring system CT3 series products, third-generation sleep ventilators, high-flow oxygen concentrators, semi-automated external defibrillators and other products have all achieved important technological breakthroughs. Registration work has gradually been implemented in overseas countries and regions such as the European Union, the United States, Thailand, Brazil, etc., and the company and related products have been awarded many honors such as the National Technological Innovation Demonstration Enterprise, the Chinese Patent Gold Award, and the Jiangsu Innovation and Development Award.
Build a global network system and continue to expand international influence. In the future, the company will continue to promote market expansion in key overseas countries and regions, develop strategic plans that meet the characteristics of target markets in response to differences in medical needs, economic levels, cultural backgrounds, etc. in different countries and regions, design high-quality products that meet the needs of local customers, cultivate sales teams with an international vision and territorial ability, solidly implement product registration work, actively seek strategic cooperation with international partners, expand overseas market channels and customer resources, and continuously enhance the company's competitiveness and influence in the international market.
Profit forecast and investment rating: Referring to the company's 2023 performance forecast and employee stock ownership plan, we adjusted the company's 2023-2025 net profit from 21.27/22.29/26.61 to 23.62/22.36/24.56 billion yuan. The PE valuation corresponding to the current market value is 15/16/15 times, respectively.
Considering the domestic aging trend, it is expected to accelerate the release of the company's products and maintain a “buy” rating.
Risk warning: Product marketing falls short of expectations, risk of R&D failure, and increased risk of market competition.