Key points of investment
The company announced its 2023 results, with revenue of 666 million yuan in 2023, up 21.6% year on year, and net profit of 135 million yuan, turning a loss into profit and growing strongly over the previous year. We believe that as the company continues to release new products, high revenue and profit growth can be expected in 2024.
Growth: New product release & channel expansion, revenue is expected to grow at a high rate 1. The penetration rate of bleeding products continues to increase, driving high revenue growth.
The penetration rate of dense mesh stents has increased, and admission to the core product Tubridge has been accelerated. The company's Tubridge dense mesh stent is the first to enter the green channel and the first domestically approved dense mesh stent product. Since approval in 2018, Tubridge's dense mesh stent had a market share of 44% in 2020, the core product contributing to the company's revenue. As the penetration rate of the dense mesh stent increases, the company's admission volume is still growing rapidly. In 2023, the company's Tubridge dense mesh stent entered 250 new hospitals, covering more than 1,000 hospitals. We believe that as the penetration rate of dense mesh stent surgery increases, the company's products are expected to continue to be released; NUMEN spring ring collection and release volume. Thanks to the collection and winning the bid, the company's Numen spring ring, which was launched in 2020, accelerated admission. More than 350 new hospitals were added in 2023, and clinical application has been achieved in more than 900 hospitals. We believe that the company's products will continue to accelerate the volume of sales, which is expected to drive high revenue growth for the company's ischemic products.
2. The acceleration of the release of new atherosclerosis & ischemia products is expected to drive long-term revenue growth.
(1) The company's various products are in a period of accelerated release, contributing to revenue growth. The company's various products, such as the Bridge vertebral artery drug stent launched in 2020, were added to about 500 new hospitals in 2023, covering more than 1,000 hospitals, and received exclusive bids from the collection in Henan Province. Clinical usage more than doubled over the previous year; the Diveer balloon catheter launched in 2022 entered more than 200 hospital companies at the end of 2023; ischemic products, NeuroHawk embolization stents, and X-Track remote catheters, accumulated at the end of 2023 Access to over 240 and 180 hospitals. The company's many products are currently in a period of accelerated entry and new product release, which is expected to drive the company's revenue to grow rapidly.
(2) After 2024, many products are still launched/ready to go on the market, and 3-5 products are launched each year to create a new growth curve. In 2022, the company began moving from the bleeding market to the faster growing ischemia market. We believe that with the company's bleeding product channel layout and strong product innovation, the company's products can be rapidly released after launch. Looking at the company's product development progress, in 2023-2026, an average of 3-5 products are expected to be launched every year. We believe that the release of new products is expected to drive continued high revenue and profit growth.
3. Channel expansion is accelerated, and a new curve is being built. (1) Accelerate overseas market promotion and build a new curve. In 2023, the company's overseas revenue was 31.7 million yuan, a year-on-year increase of 44.6%. In particular, Asia Pacific, Europe, the Middle East, Africa, and Latin America have achieved exponential revenue growth. We believe that overseas market expansion is expected to open up more room for growth and form a new curve. (2) Develop domestic grassroots markets. In 2023, the company developed more than 400 new hospitals, including about 200 county-level hospitals, gradually consolidating the primary market. We believe that in the context of the accelerated construction of grass-roots stroke centers, the company's declining channel strength is expected to gradually increase the company's product space and achieve high revenue and profit growth.
Profitability: Net interest rate is expected to increase
In 2023, the company's gross profit margin was 76.9%, an increase of 5.1 pct over the previous year, mainly due to supply chain improvements. In 2023, the company completed more than 60 supply chain improvements and upgrades, and the localization rate of raw materials has reached more than 90%, with significant cost reduction and efficiency effects; in 2023, the net profit margin was 20%, turning a loss into a profit. We believe that in 2024-2026, even with volume procurement or impact, profit margins are expected to increase under the company's continuous management optimization and scale effects.
Profit forecasting and investment advice
Based on the above assumptions, we estimate that the company's revenue for 2024-2026 will be 888/11.19/1,428 million yuan, respectively, up 30%, 29%, and 28% year-on-year; the company's net profit to mother for 2024-2026 will be 2.04/3.00/389 million yuan, respectively, corresponding EPS of 0.35, 0.52, and 0.67 yuan (21 times PS in 2024), maintaining a “gain” rating.
Risk warning
Risk of new product development and commercialization falling short of expectations; risk of increased competition in the industry; risk of excessive decline in collection; risk of demand fluctuations.