Key points of investment
Profits continued to grow at a high rate. In 2023, the company achieved operating income of 1,146 million yuan (+16.55%), net profit to mother of 329 million yuan (+30.66%), and net profit of non-return to mother of 313 million yuan (+34.39%). Among them, Q4 achieved operating income of 337 million yuan (+8.71%), net profit to mother of 124 million yuan (+25.66%), and net profit after deducting non-return to mother of 125 million yuan (+39.68%) in a single quarter.
The company's performance was in line with expectations.
The in vitro diagnosis business is developing steadily, helping to improve overall competitiveness. The company achieved revenue of 829 million yuan (+10.73%) in vitro diagnostic business in 2023, of which 518 million yuan (+7.96%) of in vitro diagnostic reagents and 310 million yuan (+15.68%) of in vitro diagnostic equipment. The luminescence and glycation series showed outstanding performance, and clinical applications continued to increase, driving performance growth in the in vitro diagnostic sector. The company added a total of 32 domestic registration certificates in the field of in vitro diagnosis in 2023. Among them, the certification of thyroxine receptor antibodies (anti-TSHR) complements the thyroid function package in the company's electrochemiluminescence immunodiagnostic reagent platform. The RA-800plus series of fully automatic red blood cell permeability analyzer products based on scattering turbidity methods have obtained registration certificates and begun marketing work. It is expected that the certification and launch of new products will continue to enhance the company's overall competitiveness.
The pipeline of treatment and rehabilitation products is rich, and new businesses are developing rapidly. The company's treatment and rehabilitation business achieved revenue of 304 million yuan (+33.79%) in 2023, of which medical products achieved revenue of 288 million yuan (+32.30%) and household products achieved revenue of 16 million yuan (+66.51%). 1) Clinical medical product line: Air waves, sputum removal machines, etc. continue to maintain good performance growth; the company continues to invest in the field of endoscopy and will further improve the product matrix for perioperative solutions in the future. 2) Dermatology and aesthetic product line: The product continues to be optimized and upgraded. The intense pulsed light therapy device was certified in October 2023. It is combined with products such as carbon dioxide laser therapy machines and extracorporeal shock wave therapy devices to provide more comprehensive solutions. In addition, the company is speeding up the incubation of consumer health businesses. In 2023, wearable photonic therapy devices were approved, and energy pumps and facemask photonic beauty devices are already on sale.
Gross margin increased significantly, and profitability increased. In 2023, the company's gross sales margin was 65.81%, up 7.29pct year on year; the net sales margin was 28.58%, up 3.03pct year on year. The significant increase in gross margin is expected mainly due to the continuous optimization of the company's product structure and an increase in the share of sales of medical and aesthetic products with high gross margins. In terms of the cost rate for the period, the sales expense ratio in 2023 was 16.99%, up 1.96 pct year on year; the management expense ratio was 5.33%, up 0.67 pct year on year; the R&D expense ratio was 14.82%, down 2.55 pct year on year; and the financial cost ratio was -2.76%, up 0.87 pct year on year. Among them, the increase in sales expenses is mainly due to the corresponding increase in promotion fees due to the launch of e-commerce platforms in 2023.
Investment advice: Based on the 2023 performance situation, considering factors such as increased market competition, the profit forecast for 2024 and 2025 will be lowered as appropriate, and a new profit forecast for 2026 will be introduced. We expect the company's revenue for 2024-2026 to be 14.12/17.18/2,054 billion yuan, respectively, net profit to mother of 422/5.26/646 million yuan, corresponding EPS of 0.99/1.23/1.51 yuan, respectively, and corresponding PE of 17.55/14.07/11.47 times, respectively. Due to the continuous optimization of the company's product structure, profitability improved significantly, and maintained a “buy” rating.
Risk warning: IVD collection risk; risk that product development progress falls short of expectations; market competition increases risk.