Matters:
The company released its 2023 annual report. For the full year of '23, the company achieved operating income of 678 million yuan (+52%), net profit to mother of 58 million yuan (+167%), and deducted non-net profit of 44 million yuan (+361%). In the 23Q4 alone, the company achieved operating income of 249 million yuan (+52%), net profit attributable to mother of 13 million yuan (-3%), and deducted non-net profit of 0.07 billion yuan (+36%).
Commentary:
Sales of mid-range and high-end products have continued to break through. In 2023, relying on the continuous promotion of the AQ-300 4K ultra-high-definition endoscopy system, the number of large medical terminal customers in the domestic market continued to grow, driving the company's high-end product sales to continue to increase. In 2023, the number of the company's high-end mainframes and lenses installed in tertiary hospitals (including winning bids) was 96 and 316, respectively, and 73 level-3 hospitals (including winning the bid).
In '23, the company's endoscopic equipment revenue was 620 million yuan, endoscopic diagnostic consumables revenue was 40 million yuan, and endoscopic maintenance revenue was 0.1 billion yuan.
Domestic revenue is growing rapidly, and overseas certification is progressing smoothly. In 2023, the company's domestic revenue was 550 million yuan (+64%), accounting for 83%. The company has increased the continuous promotion of high-end models, effectively expanded the number of large domestic medical terminal customers, and achieved rapid growth in domestic sales. Overseas revenue was 110 million yuan (+12%), accounting for 17%. The AQ-300 obtained certification in Europe in January '24. The company continued to promote the entry of products into the international high-end market through the European marketing center, which is progressing smoothly.
Research and development results are remarkable, and new products are coming out frequently. In 2023, the company's R&D expenses were 147 million yuan, an increase of 52.26% over the previous year, accounting for 21.68% of revenue. With continuous R&D investment, the company's product pipeline has made many important advances. In 2023, the company released a new UHD series duodenoscope, AQ-200Elite endoscopy system, UHD series bifocal endoscope, split upper gastrointestinal endoscope, and also released various microscopy products such as ultra-fine endoscopy, ultra-fine percutaneous biliary endoscopy, and bronchoscopy to flexibly meet the diagnosis and treatment needs of different departments.
Promote the construction of a marketing system and strengthen academic service capabilities. The company is continuously deepening the market coverage and breadth of its products, guided by domestic and foreign market needs, and continuously improving its professional academic service capabilities. In 2023, the company increased its product promotion efforts by jointly hosting the first “Australia-China Cup” CBI National Case Competition and hosting hands-on training courses on digestive endoscopy techniques. At the same time, by strengthening communication with the clinical side, the company has efficiently increased the coverage of hospitals and doctors. In addition, the company participated in influential academic conferences around the world through various forms such as live surgical demonstrations and product exhibitions, showing international exhibitors the outstanding performance of the product and the company's ability to continue to innovate, further enhancing the company's international brand.
Investment advice: Based on the 23-year performance, we expect the company's 24-26 revenue to be 10.1 billion yuan, 14.3 billion yuan, and 2.02 billion yuan respectively (the original forecast values for 24-25 were 10.1 billion yuan and 1.46 billion yuan), with year-on-year growth rates of +48.4%, +42.0%, and +41.6%, respectively. The company's net profit for 24-26 was 1.3, 190 million yuan, and 280 million yuan respectively (the original forecast values for 24-25 were 140 million yuan and 220 million yuan). The year-on-year growth rates were +120.2%, +48.0%, and +48.5%, respectively. PE was 58, 39, and 26 times, respectively. According to DCF model estimates, the company was given an overall valuation of 10.3 billion yuan, corresponding to a target price of about 77 yuan, maintaining a “recommended” rating.
Risk warning: 1. The progress of international business promotion falls short of expectations; 2. The progress of new product launches falls short of expectations.