Incidents:
On March 27, 2024, Cardiac Medical released its 2023 annual report. The company achieved revenue of 1,187 million yuan (+32.43%), net profit of 492 million yuan (+37.98%), net profit of 462 million yuan (+42.74%) after deducting net income from non-return mother; of these, 23Q4 achieved revenue of 299 million yuan (+28.63%), net profit of 104 million yuan (+85.74%), net profit from non-return mother.
Comment:
R&D investment is growing steadily, and profitability can still be increased day by day. For the full year of 2023, the sales expense ratio was 10.96% (-0.64pct), the management expense ratio was 4.64% (-0.50pct), and R&D investment accounted for 21.94% (+2.72pct), of which the costed R&D expenses ratio was 14.56% (-0.78pct), financial expenses ratio -0.71% (+0.51pct), and the total period cost ratio was 29.45% (-1.41pct); gross profit margin of 76.45% (+1.27pct), net profit margin 41.04% (+1.77pct). In the next few years, the company's aortic and peripheral product matrices will continue to improve and enter the tumor intervention circuit. Sales cost support for new products and new businesses needs to be focused on.
Aortic interventions are growing steadily, and intraoperative stents, peripheral interventions, and overseas business are expanding rapidly. Looking at product types, in 2023, the company ① aortic intervention: revenue of 940 million yuan (+28.07%), Castor branch stents continued to gain strength, and the number of Talos stents admitted and implants increased rapidly; ② intraoperative stents: revenue of 132 million yuan (+54.59%), the number of Fontus branch stents admissions and implants increased rapidly; ③ peripheral intervention: revenue of 115 million yuan (+49.30%), and Reewarm PTX drug balloons continued to gain strength. In terms of regional sales, the company's overseas revenue in 2023 was 82 million yuan (+56.19%). By the end of 2023, sales had covered 31 countries, and the business expanded to other countries and regions in Europe, Latin America and the Asia-Pacific region.
Research and development continues to gain strength, and the product matrix is expanding rapidly. ① In the field of aortic intervention: Cratos branch stents and blocking balloons have submitted registration data to NMPA. Aegis II stents are in the pre-marketing clinical stage, and thoracic multi-branch stents and aortic flow limiting stents are in the single-center clinical follow-up phase; ② Peripheral intervention: intravenous, Vflower venous stents have submitted registration data, Vewatch venous venous filters, and Fishhawk mechanical thrombectomy catheters have completed pre-marketing clinical implantation; on the arterial side, new-generation bare balloon and fibrous capillary embolization springs are in the registration stage ; ③ In the field of oncology intervention, microsphere products are in the pre-marketing clinical implantation stage, and the HepaFlow TIPS stent has been approved for a special review procedure for innovative devices.
Profit forecast and investment advice: The company is a leading manufacturer in the field of aortic intervention in China. The field of intraoperative stents and peripheral intervention is rapidly expanding. After the relevant products are approved, it will officially enter the new business field of oncology intervention. We expect the company's revenue for 2024-2026 to be 1,547/19.69/2,468 million yuan, and net profit to mother of 637/8.03/1,009 million yuan, corresponding to 2023-2025 PE of 24X/19X/15X.
For the first coverage, we gave the company a “buy” rating.
Risk warning: policy risks, channel construction falling short of expectations, product development registration falling short of expectations, etc.