2023 results are in line with our expectations
The company announced 2023 results: revenue of 1.19 billion yuan, +32% year over year; net profit to mother of 490 million yuan, +38% year over year. The results were in line with our expectations.
Development trends
All lines maintain a good volume trend. By product line, 1) Aortic stent revenue was 940 million yuan, +28% over the same period last year. Product sales volume +28% YoY, unit price remained stable; 2) Intraoperative stent revenue was 130 million yuan, +55% YoY; 3) Peripheral revenue was 120 million yuan, +49% YoY. By the end of 2023, the company's products had covered 2,100 major hospitals in China, and the core products Castor thoracic branch stents/Minos abdominal stents and PTX peripheral medicine balls covered more than 1,000/800/900 hospitals respectively. As of 1Q24, there has been no collection of aortic stents at the level of the Multi-Provincial Alliance or above.
Innovative products are expected to enter the harvest period. As of 1Q24, Cratos has submitted registration data to the State Drug Administration and is about to begin the first clinical trial with CE certification; Castor opened the window to obtain the first domestic filing certificate and complete clinical implantation; the peripheral Fishhawk mechanical thrombectomy catheter completed clinical implantation; the Vflower venous stent completed registration and submission of supplementary materials; the VeWatch venous venous filter completed pre-marketing clinical implantation; the under-knee drug ball completed clinical implantation; the TIPS coated stent in the field of tumor intervention completed clinical implantation and entered the green channel; polyvinyl alcohol embolization Microspheres completed the first implantation. The company expects to obtain at least 8 product registration certificates in the domestic market within 2024, enter the green channel for 1 product, complete pre-marketing clinical trials for 4 products, submit 3 product registration applications, and promote at least 2 FDA registration projects. We expect the company's new peripheral products to contribute revenue at an accelerated pace starting in 2025-26.
Internationalization is worth looking forward to. In 2023, the company's overseas revenue reached 80 million yuan, +56% year-on-year, accounting for 7% of revenue, covering 31 countries and regions. The company expects to cover 66 additional countries in the long term. We estimate that the company's share of global intra-aortic stent surgeries in 2022 was about 7%, behind Gore, Medtronic, and Cook. Based on the constantly upgraded product portfolio and strong pioneering innovation in the field of artery, we expect the company to continue to release aortic stents in many overseas regions.
Profit forecasting and valuation
We keep our 2024/25 net profit forecast unchanged, and the current stock price corresponds to the 2024/25 price-earnings ratio 24/22 times. We maintain our outperforming industry rating and target price of 236 yuan, which corresponds to a price-earnings ratio of 30/28 times in 2024/25, with 28% upside compared to the current stock price.
risks
The price reduction of collection exceeded expectations, research and development failed, new product promotion fell short of expectations, and internationalization fell short of expectations.