Incidents:
The company released its 2023 annual report, achieving full year operating income of 1,187 million yuan (YoY +32.43%), net profit to mother of 492 million yuan (YoY +37.98%), and net profit of 462 million yuan (YoY +42.74%) after deducting non-return net profit. With 2023Q4, the company achieved operating income of 299 million yuan (YoY +28.63%), net profit attributable to mother of 104 million yuan (YoY +85.74%), and net profit not attributable to mother of 97 million yuan (YoY +100.91%).
Comment:
1. Performance growth in 2023 slightly exceeded expectations, hospital coverage of core products was further increased, the sinking market continued to expand, and product release was accelerated. The company continues to develop second-tier, third-tier, and fourth-tier cities and some populous counties to tap the potential of the sinking market, and increase academic promotion to drive an increase in market coverage. By the end of 2023, more than 1,000 Castor branched aortic stents and delivery systems had been hospitalized, more than 800 Minos abdominal aortic stents and delivery systems had been admitted, and more than 900 Reewarm PTX drug balloon dilatation catheters had been admitted, driving steady growth in various sectors. Among them, aortic stents had revenue of 940 million yuan (+28.07%), intraoperative stent revenue of 132 million yuan (+54.59%), and peripheral revenue of 115 million yuan (+49.3%).
2. International business has achieved high growth, and market expansion continues to advance. In 2023, the company's innovative products also made breakthrough progress in the international market. Castor branch laminating stents and delivery systems were implanted for the first time in Singapore and many European countries (in total, 16 countries), Minos abdominal aortic stents and delivery systems were implanted for the first time in Turkey and other countries (in total, in 19 countries), and the Hercules Low Profile straight tube laminating stents and delivery systems were implanted for the first time in Singapore and many European countries (in total, in 21 countries), Reewarm The PTX pharmaceutical balloon expansion catheter was first implanted in Brazil. Currently, the business scope has covered 31 countries in Europe, Latin America, Asia Pacific, etc., and has driven international market revenue of 82 million yuan, an increase of more than 55% over the previous year. As the recognition and popularity of the company's products in overseas clinical trials further increases, it is expected to maintain a high growth rate and continue to contribute.
3. Continuing to invest heavily in R&D, various products are about to be registered, which is expected to drive long-term growth. In 2023, the company invested 260 million yuan (+51.2%) in R&D, accounting for 21.94% of revenue, which is at a high level among high-value consumables companies. With a continuous high level of R&D investment, the company has abundant R&D pipeline reserves. Among them, products such as blocking balloons, venous stents and delivery systems, new-generation peripheral bare balloon catheters, and fibrous embolic spring rings have all begun registration. The HepaFlow laminated stent system has entered the green channel, and clinical trials of various products are progressing in an orderly manner, and the company has strong long-term growth momentum reserves. At the same time, the company also obtained the first domestic custom thoracic aortic stent filing certificate, which is expected to launch a new overseas customized business model.
Profit forecast: We expect the company's 2024-2025 revenue to be 15.68, 20.19, and 2,547 billion yuan, respectively, with year-on-year growth rates of 32.08%, 28.77%, and 26.16%, respectively, and net profit to mother of 6.31, 8.12, and 991 million yuan, respectively. The year-on-year growth rates are 28.18%, 28.69%, and 21.96%, corresponding to the current stock price PE, respectively, maintaining the “recommended” rating.
Risk warning: New product development and registration falls short of expectations, market expansion falls short of expectations, risk of price reduction in collection, risk of rising raw material prices, increased risk of market competition, risk of changes in industry policies, risk of geopolitical fluctuations, etc.