The 2023 results are in line with expectations: the company released its 2023 annual report. During the reporting period, it achieved operating income of 1,187 million yuan, an increase of 32% over the previous year; realized net profit of 492 million yuan, an increase of 38% over the previous year; realized net profit without return to mother of 462 million yuan, an increase of 43% over the previous year. The company's 2023 results are in line with market expectations. According to the company's 2023 annual report, the company's gross margin for 2023 was 76.45% (75.18% for the same period last year); the sales expense ratio was 10.96% (11.60% for the same period last year); the management expense ratio was 4.64% (5.13% for the same period last year); and the R&D expenses ratio was 14.56% (15.34% for the same period last year). The company's gross margin and various expense ratios remained stable in 2023.

The aorta continues to grow, with strong intraoperative, peripheral and overseas performance: in 2023, the company's Castor branch aortic stent and delivery system, Minos abdominal aortic stent and delivery system, Reewarm PTX drug balloon dilatation catheter continued to gain strength, and the number of patients admitted to the new Talos straight-tube thoracic aortic stent system and Fontus branch intraoperative stent system all increased rapidly. According to the company's annual report, in 2023, aortic stenting revenue increased 28% year over year, intraoperative stents increased 55% year over year, and peripheral and others increased 49% year over year. The company's products have entered 2,100 hospitals, of which Castor has covered more than 1000 terminal hospitals, Minos has covered more than 800 terminal hospitals, and ReeWarmptx drug balloons have covered more than 900 terminal hospitals. In 2023, the company's overseas sales revenue increased 55% year over year. The company has sold in 31 countries and expanded its business to other countries and regions in Europe, Latin America and the Asia-Pacific region.

R&D progressed smoothly in 2023: In 2023, the company submitted registration data for 6 products to the State Drug Administration. On the aortic side, blocking balloons, Cratos branched aortic stents and delivery systems have submitted registration data. Aegis II abdominal aortic stents are in pre-marketing clinical trials; for peripheral veins, the Vflower venous stent and delivery system have completed registration data submission, and the Vewatch venous venous filter and Fishhawk mechanical thrombectomy catheter have completed a generation of pre-marketing clinical implantation; on the peripheral artery side, the new peripheral bare balloon catheter and fibrous hair embolization spring ring are all in the registration stage. The catheter is in pre-marketing clinical trials; in terms of tumor intervention, microsphere products are in the pre-marketing clinical implantation stage, hepaFlow? The TIPS laminating stent system has been approved for the special review process for innovative medical devices and is currently in the clinical follow-up phase.

Maintaining a “buy” rating: We maintain the company's profit forecast for 2024-2025. We expect net profit to be 654 million yuan and 826 million yuan, respectively, and give a profit forecast for 2026 for the first time. The estimated net profit to mother is 1,023 million yuan, corresponding to PE of 24 times, 19 times, and 15 times, respectively, to maintain the “buy” rating.

Risk warning: increased market competition, R&D risks, exchange rate fluctuations