Introduction to this report:
In 2023, performance was under pressure due to the influence of collection and base figures. As the marginal impact of collection narrows and the base effect declines, it is expected that the growth rate will return to normal from 2024 and maintain an increase in holdings rating.
Summary:
Maintain an increase in holdings rating. Considering the company's operating trends, the 2024-2025 EPS forecast was lowered to 0.48/0.53 yuan (previously 0.66/0.76 yuan), and the 2026 EPS forecast was added to 0.58 yuan. Maintain an increase in holdings rating.
Performance is under pressure due to the influence of collection and base figures. The company achieved revenue of 13.229 billion yuan for the full year of 2023, down 3.8% year on year, and net profit to mother of 2.02 billion yuan, down 27.6% year on year. Performance was pressured by collection and base figures. The cash flow situation is good, with operating cash flow of about 2.80 billion yuan in 2023.
The marginal impact of harvesting has narrowed, the base effect has subsided, and it is expected that the normal growth rate will return. Affected by the reduction in collection prices and the sales base of epidemic prevention materials, the medical device sector's revenue (including internal sales) increased slightly by 2.6% to 7.0 billion yuan in 2023. The operating profit margin declined by 2 percentage points after deducting exchange gains and losses, while revenue from conventional products increased by about 10% after deducting epidemic prevention materials, reflecting the continued increase in the company's market share. The orthopedic sector achieved revenue of 1.27 billion yuan, a year-on-year decline of 38%, due to reduced procurement prices and correction of spinal channel inventory. It is expected to recover steadily in 2024. The pharmaceutical packaging sector was affected by the high base of COVID-19 vaccine packaging orders, and revenue fell 4% year over year to 2.02 billion yuan, and routine business remained basically flat.
Revenue from the involved sector increased 11% year-on-year to 1.93 billion yuan, and overseas business maintained a high growth rate. The domestic market was affected by collection and stock shortages at one time only increasing by 6%, and the growth rate is expected to pick up. The blood management business was dragged down by Radesos, and annual revenue fell 5% year over year to 1.04 billion yuan. Overall, the impact of collection narrowed marginally in 2024, the base effect subsided, and the company's performance is expected to return to a normal pace of growth.
The product line continues to expand, and internationalization continues to advance. The company attaches great importance to innovation. R&D expenses reached 590 million yuan in 2023, accounting for 4.5% of revenue. By the end of 2023, the number of R&D personnel increased by nearly 100 to 1,370 over the same period last year. While enriching the existing product line, it is also continuously expanding new business areas, including life information and support, chronic endocrine disease management, endoscopic diagnosis and treatment, etc., which is expected to continue to create new growth points.
The company's internationalization also continues to advance. Overseas revenue reached 3.4 billion yuan in 2023, accounting for 26%, an increase of 7%. The pharmaceutical packaging and blood management business achieved high growth overseas. As the internationalization of various business segments progresses one after another, overseas business revenue is expected to continue to grow.
Risk warning: The impact of mining is greater than expected, and the development of new business sectors falls short of expectations