Incident: The company announced its 2023 annual report. In 2023, it achieved operating income of 1,476 million yuan, a year-on-year increase of 16.24%; realized net profit of 53 million yuan, a year-on-year decrease of 75%, and achieved adjusted net profit of 179 million yuan, a year-on-year decrease of 16%.
Expense rates have increased dramatically, and gross margins are relatively stable. The company's management expenses rate in 2023 was 18.94%, up 4.37 pcts year on year; sales expenses ratio was 33.41%, up 9.93 pct year on year; financial expenses were -5.94%, down 2.74 pct year on year. The company's gross margin in 2023 was 62.38%, up 0.5 pct year-on-year.
The company's net profit margin in 2023 was 3.3%, down 13.49pct year-on-year.
The domestic market maintains a leading position, and product strength continues to improve. In the domestic market, the number of cases completed by the company was 212,000, up 15.3% year on year, and adjusted profit was 256 million yuan, up 29.9% year on year.
The company's domestic market maintained steady growth in terms of achieving cases, revenue and profit, and maintained the highest market share. In terms of adult orthodontics, in June 2023, the company launched the AngelLink Era Angel Interface System to enable dentists to solve clinical problems in indications such as remote tooth removal and tooth extraction; in terms of early correction, the company relied on self-developed angel hook technology to launch a next-generation KiD front traction solution.
The international market is being vigorously developed, and it is expected to become a new business addition in the future. In the international market, the number of completed cases reached 33,000, with an adjusted loss of approximately $211 million. Since the company officially launched its international business in 2023, the company has successfully entered more than 30 countries and regions. In the European market, the company carried out in-depth cooperation, training and education around head orthodontics KOLs, and established the Times Angel European Scientific Expert Committee and Clinical Expert Committee; in the Australian and New Zealand market, the company changed the original distribution model to a direct sales model and formed a local business team with many years of experience in the orthodontic market; in the Brazilian market, after completing the acquisition of Aditek, the company promoted collaborative empowerment in medical design and intelligent manufacturing in an orderly manner, which strongly supported the rapid growth of Aditek's invisible correction business.
Maintain a “buy” rating. EPS is expected to be 0.46/0.86/1.39 yuan in the next three years. Considering the rapid expansion of the company's overseas business, it will maintain a “buy” rating.
Risk warning: policy risk, risk of increased competition in the industry, risk of R&D falling short of expectations