Incident: The company announced its 2023 results. The annual revenue was 10.012 billion yuan, up 7.87% year on year, net profit to mother was 654 million yuan, up 30.78% year on year, and net profit after deducting non-return to mother was 619 million yuan, up 23.20% year on year; the performance was in line with market expectations.
Comment:
The revenue structure continues to be optimized, and the calculation of impairment affects 23Q4 profit. In 2023, the company achieved operating income of 10.012 billion yuan (YOY +7.87%), net profit of 654 million yuan (YOY +30.78%), net profit of 619 million yuan (YOY +23.20%), of which the 23-year single Q4 achieved operating income of 2,695 million yuan (YOY +2.42%), net profit to mother of 75 million yuan (YOY -5.99%), net profit of non-return to mother of 64 million yuan (YOY -9.74%). The year-on-year decline in net profit due to the 23Q4 was mainly due to the company accruing asset impairment losses of 0.3 million yuan and credit impairment losses of 75 million yuan during the quarter. The 23-year sales expense ratio was 9.12%, down 0.45 pct year on year, management expense ratio 5.20%, up 0.23 pct year on year, R&D cost rate 4.43%, up 0.11 pct year on year. As of the end of 2023, the company held contract liabilities of 2,336 billion yuan and had plenty of on-hand orders.
Strong main business, the equipment and pharmaceutical equipment sector is growing steadily. In the fields of sensory control equipment, experimental equipment, surgical instruments, etc., where the company has advantages in the industry, intensive cultivation has stabilized its leading position in the industry, and the contract amount is abundant. In 2023, medical device manufacturing revenue was 4.167 billion yuan (YOY +9.15%), gross margin was 40.82% (YOY+0.76pct), of which: experimental technology product revenue of 477 million yuan (YOY +28.70%), gross profit margin 29.08% (YOY -2.89pct); surgical instrument product revenue of 306 million yuan (YOY +14.47%), gross profit margin 37.99% (YOY +0.53 pct); pharmaceutical equipment revenue of 1,923 million yuan (YOY + 26.73%), gross margin of 27.12% (YOY -0.78pct).
Continuous investment in R&D, international and domestic two-wheel drive. With continuous investment in research and development, projects such as the intelligent circular accelerator system, 16-row 85cm large aperture spiral CT, and biological X-ray irradiators are progressing steadily. The company spent 443 million yuan on R&D in 2023 (YOY +0.49%). The company independently developed the world's first batch of dual-mode high-speed continuous and BFS products and was officially shipped in September 23. The launch of the new products is expected to contribute new momentum to the long-term development of the pharmaceutical equipment sector. Furthermore, in 2023, the company's overseas revenue was 241 million yuan (YOY +55.36%), accounting for 2.41% of total revenue, and gross margin of 50.94% (YOY +7.86pct), and its core business overseas achieved rapid growth.
Profit forecasting, valuation and ratings: The company is a leading medical device and pharmaceutical equipment company. Considering increased cost investment, the 24-year net profit forecast was slightly lowered to 816 million yuan (the original forecast value was 826 million yuan, down 1.21% from the previous one); considering the increase in profit margin, the 25-year net profit forecast was raised to 1,002 billion yuan (the original forecast value was 964 million yuan, up 3.94% from the previous period), and the net profit forecast for the additional 26 years was 1,193 billion yuan. The current price corresponds to PE 13/11/9 times for 24-26, maintaining the “buy” rating.
Risk warning: orders fall short of expectations; investment in fund-raising projects falls short of expectations; investment losses.