The company's endogenous revenue grew rapidly in 23 years, and we expect continuous improvement in 24 years to achieve revenue/net loss of 1026/28.09 million US dollars (yoy +8.9%/+0.2%), which is lower than our expectations (estimated revenue/net loss of 1519/25.51 million US dollars). We speculate that external factors in the domestic industry affect the short-term pace of in-hospital equipment tendering and new product admission, and the relevant revenue recovery after the termination of the company's external patent licensing. Excluding the impact of the concession revenue rush, the company's actual product sales and external service revenue in '24 was $12.41 million (yoy +31.8%), and endogenous revenue continued to grow rapidly. We expect the company to achieve revenue of $1303/1703/21.65 million in 24-26, and we are optimistic that the company's net profit will improve in '25. We used the DCF valuation method (assuming a WACC of 12.8% and a sustainable growth rate of 0.2%), corresponding to a target price of HK$1.07, maintaining a “buy” rating.
Equipment products: Revenue grew steadily in 23 years, and we are optimistic about the upward trend in 24 years. We estimate that the company's revenue for equipment products was about 7 million US dollars in 23, maintaining steady year-on-year growth. Looking ahead to the whole year, considering the company's leading performance of equipment products, continued increase in market recognition (by the end of 23, the domestic market share of the company's lung navigation products had reached 40%), and the recovery in industry demand, we are optimistic that the sector will continue to improve. At the same time, the company's localized production of equipment products has made positive progress. The company's domestic version of the LungPoint system was approved domestically in 9M23, and the company expects the domestic version of the LungPro system to be approved domestically in 3Q24. We are optimistic that the sector and overall gross margin will benefit from the localized production of products and further improve.
Treatment and diagnostic consumables: Product sales are breaking ground and are expected to become another pillar of the company. We estimate that the company's revenue for treatment and diagnostic consumables products was about 5 million US dollars in 23 years, an increase of more than 100% over the previous year, mainly due to positive progress in the commercialization and promotion of various new therapeutic consumables, including: 1) InterVapor, a hot steam ablation product used to treat COPD, had been commercially implanted in more than 20 hospitals in China by the end of 23. 2) “Fog Spring” single-use endoscopic nebulization catheters as domestic It is the only approved similar product. It has now achieved clinical application in various scenarios such as bronchiectasis combined with infection, bronchial tuberculosis, and nebulized anesthesia. We are optimistic that it will continue to expand its application space and contribute to increased performance. Considering the company's rich range of consumables products and the continuous increase in treatment acceptance, we are optimistic that the sector will continue to develop rapidly in 24 years, which is expected to become another pillar of the company.
Ongoing research projects are progressing in an orderly manner, and the product layout continues to be enriched
1) RF-II: For lung cancer treatment, the company submitted a registration application to the NMPA in 12M23. The company expects it to be listed domestically in 25 years. We are optimistic that it will provide new clinical solutions for lung cancer treatment and actively contribute to performance growth after launch; 2) TLD: For COPD treatment, the company has initiated registered clinical trials in China at 7M23, and has enrolled more than 40 patients in over 20 hospitals by the end of '23. The company expects it to be listed domestically in '27.
Risk warning: The progress of clinical trials of core products has been delayed, market competition has intensified, and core technical personnel have been lost.