Incident: The company released its 2023 annual report, achieving operating income of 1.3 billion yuan (-2.7%), net profit to mother of 210 million yuan (+11.9%), and net profit of 180 million yuan (+8.6%) after deducting non-return to mother.
Exceed equity incentive targets. Exceeded the 21-year equity incentive target. On a quarterly basis, revenue for Q1/Q2/Q3/Q4 in 2023 was 2.7/3.1/3.5/370 million yuan, respectively. The year-on-year growth rates were -15%/-9%/+7%/+5%, respectively. The revenue and net profit growth rates in the first two quarters were mainly pressured by the large vaccine syringe product base, which affected apparent performance. In terms of profitability, in 2023, gross margin was 34.9% (+1.28pp), sales expense ratio was 6.02%, (-0.7pp), management expense ratio was 7% (-0.7pp), R&D expenses ratio was 3.9% (+0.9pp), and net profit margin was 17.2% (+2.3pp), and profitability improved.
The blood purification and cardiothoracic surgery business grew steadily, and the impact on the infusion-type vaccine syringe product base declined significantly. By business, revenue from blood purification products was 950 million yuan in 2023, an increase of 7.6% over the previous year, achieving steady growth. Revenue from infusion products was about 230 million yuan, down 33.5% year on year. Excluding the impact of vaccination products, infusion products (excluding vaccine syringes) achieved operating revenue of 220 million yuan, a decrease of 1.2% year on year.
Cardiothoracic surgery revenue was $0.7 billion (+7.8%). In 2022, the company entered a new circuit of vascular intervention, and PTA hyperbaric balloon dilatation catheters were approved for sale. Currently, there are more than 30 research projects under development, which are expected to contribute to the increase in 2024.
Henan Union hemodialysis consumables were collected and implemented, and the company's pricing strategy was clear. The decline in hemodialysis collection this time is relatively moderate. Domestic manufacturers have clear pricing strategies, and the localization rate is expected to increase further. Prices for relatively mature varieties such as hemodialyzers (high throughput) are relatively high. For example, Weigao dropped 43%, and Sanxin Medical dropped 50%. According to Rule 1, they ranked second and fourth respectively in terms of selection price. Through better bid prices, domestic enterprises are expected to retain profit margins. For products with a relatively good competitive pattern, such as indwelling needles for dialysis (4 foreign-funded, 1 domestically produced), Sanxin Medical is the first domestically produced registration certificate for this product. The targeted price is low, with a decrease of 70%, so it is expected that price can be quickly exchanged for volume through collection.
Profit forecasting and investment advice. The estimated net profit from 2024 to 2026 will be 2.3, 260 million yuan, and 300 million yuan, respectively, maintaining the “buy” rating.
Risk warning: Product prices may drop drastically, and blood purification capacity releases fall short of expectations.