Matters:
The company released its 2023 annual report, achieving full year revenue of 1,187 million yuan (+32.43%), achieving net profit of 492 million yuan (+37.98%), and net profit after deduction of 462 million yuan (+42.74%). It is consistent with the previously announced performance report.
Company dividend plan: 30 yuan (tax included) for every 10 shares, and 4.9 shares (tax included).
Ping An's point of view:
Core products continue to gain strength, and medicine balls drive high growth in peripheral pipelines
The company achieved annual revenue of 940 million yuan (+28.07%). Among them, the core products CASTOR and MINOS are still the core growth drivers. Castor covers more than 1,000 domestic hospitals, and it is estimated that the annual growth will still reach about 30%; MINOS covers more than 800 hospitals domestically, and is also developing smoothly in overseas markets, which is estimated to have contributed to a higher growth rate. The intraoperative stent achieved revenue of 132 million yuan (+54.59%), and achieved sustainable high growth driven by the new product Fontus. The peripheral sector achieved revenue of 115 million yuan (+49.30%) in '23, of which Pharmaceutical Ball Reewarm PTX is the core product. The company's pharmaceutical products have cumulatively covered more than 900 terminal hospitals, and we expect further increases in the future to come from intensive cultivation in hospitals.
The company's overall gross margin reached 76.45% (+1.27pct), and the increase in the utilization rate of production capacity facilities such as the Dieqiao Road site boosted the increase in gross margin. Overseas gross margin increased 5.95pct year-on-year due to a further decline in the share of revenue from traditional OEM products. Sales, management, and R&D expenses were 10.96% (-0.64pct), 4.64% (-0.50pct), and 14.56% (-0.78pct), respectively. The cost ratio was reduced due to normalized operation and scale effects.
More new domestic products are expected to be launched. Overseas markets are constantly being developed. Apart from aortic products such as Fontus and Talos, which have already been marketed and are gradually entering the marketing period, the company will also launch more peripheral products during the year. The introduction of intravenous filters, peripheral stents, blocking balloons, spring rings, etc. can significantly expand the company's peripheral product line, which will help the company gain an advantage in a market where peripheral intervention is complex and diverse.
In terms of overseas development, the company is committed to expanding markets in Europe, Asia Pacific, Latin America and other regions, covering 31 countries. Among them, Minos and HerculeSLP, which have mature sales conditions overseas, have entered 19 and 21 countries respectively, and achieved sales on a certain scale; Castor has also entered 16 countries, providing quick and effective solutions for complex local thoracic aortic lesions involving the arch. Looking ahead, the company's share of overseas revenue is expected to exceed 10% in a short period of time.
Maintain a “Recommended” rating. Based on the company's actual performance in 2023 and recent product penetration, the 2024-2025 profit forecasts were adjusted and added to EPS of 7.94, 10.06, and 12.74 yuan, corresponding to net profit of 6.57, 8.32, and 1,054 million yuan (the original 2024-2025 forecast was 6.39 million yuan and 846 million yuan). Considering that the company's stock price has recently achieved relative returns compared to the market, and the mid-term development trend has not changed, the “recommended” rating is maintained.
Risk warning: 1) There is price reduction pressure such as collection of high-value consumables. If the decline exceeds expectations, it may affect the company's growth rate; 2) if the clinical/marketing/bidding results fall short of expectations, it may reduce the company's subsequent growth momentum; 3) If changes in the overseas market environment cause the company to go overseas lower than expected, it may have a negative impact on medium- to long-term performance growth.