Key points of investment:

The company's 2023 performance is in line with expectations: the company released its 2023 annual report. During the reporting period, it achieved operating income of 329 million yuan, an increase of 27% over the previous year; realized net profit of 06 million yuan, an increase of 85% over the previous year, and the company's 2023 performance was in line with expectations.

According to the company's 2023 annual report, the company's gross margin during the reporting period was 63.51% (69.11% in the same period last year, mainly affected by collection and product structure); the sales expense ratio was 33.20% (31.12% in the same period last year); the management expense ratio was 12.41% (13.90% in the same period last year); and the R&D expense ratio was 27.74% (29.55% for the same period last year).

The volume of 3D surgeries is growing rapidly, and new products are being promoted smoothly: According to the company's annual report, by the end of 2023, the company's products had covered more than 1,000 hospitals in 31 provinces, autonomous regions and municipalities directly under the Central Government, and the total number of 3D surgeries exceeded 50,000.

As the first domestically produced product approved by the NMPA for marketing, TrueForce pressure catheters have completed more than 1,000 radiofrequency ablation surgeries under pressure monitoring guidance at various centers. The IceMagic balloon cryoablation catheter and iceMagic cryoablation device, certified in August 2023, are the first domestically produced cryoablation products approved for atrial fibrillation treatment. Up to now, they have been connected to the Internet in more than 20 provinces.

Breakthrough in overseas markets: In 2023, the company achieved revenue of more than 10 million US dollars, an increase of more than 50% over the previous year. The company's products have covered 35 countries and regions, 21 products have obtained CE certification, 4 products have obtained US FDA registration permits, 1 product has obtained UK UKCA certification, and 20 products have obtained Brazilian registration certificates.

Maintaining a “buy” rating: We expect gross margin fluctuations to have a short-term impact. The gross margin is expected to increase after the launch of new products, maintaining the company's profit forecast for 2024-2025. The estimated net profit to mother is 59 million yuan and 113 million yuan respectively, and for the first time, we have given a profit forecast of 2026. The net profit to mother is estimated to be 153 million yuan, maintaining the “buy” rating.

Risk warning: R&D risk, mining price reduction risk, exchange rate fluctuation