Event: The company released its 2023 annual report, and its performance is growing steadily and rapidly.
In 2023, the company achieved operating income of 2.12 billion yuan, an increase of 20.29%; net profit to mother was 454 million yuan, an increase of 22.88% year on year; net profit after deducting non-return to mother was 442 million yuan, an increase of 29.52% year on year. Looking at the single quarter, 23Q4 achieved operating income of 652 million yuan, up 27.58% year on year and 53.7% month on month; net profit of 134 million yuan, up 7.57% year on year, up 181.37% month on month; net profit after deducted from mother to mother of 121 million yuan, up 3.43% year on year, up 150.32% month on month; gross profit margin 70.96%, down 1.16 pct year on year; net profit margin 20.51%, down 3.82 pct year on year.
Ultrasound: High revenue share, stable growth, product trend towards high-end and all-scenario integration.
In 2023, the company's ultrasound business achieved revenue of 1.22 billion yuan, an increase of 13.28% over the previous year. In 2023, the S80/P80 series of the company's next-generation ultra-high-end ultrasound platform was officially launched on a small scale, comprehensively improving full-body intervention and obstetrics solutions, and received high praise in the clinical process; equipped with the fifth-generation artificial intelligence prenatal ultrasound screening technology, Fengyan S-Cancers 5.0, completed clinical verification. It is the world's first artificial intelligence technology based on automatic capture of standard sections based on a built-in ultrasound host, further consolidating the company's competitiveness and technical advantages in the field of high-end ultrasound obstetrics and gynecology; the next-generation high-end portable platform has completed engineering development, and is expected 2024 Obtaining a registration certificate and introducing it to the market this year will greatly strengthen the company's competitiveness at home and abroad in the high-end portable market. The products currently on sale, the S60/P60 series, ProPet veterinary ultrasound, etc. also completed version upgrades in 2023, improving images and improving functionality, and increasing product market competitiveness. With the official launch of the ultra-high-end ultrasonography and intravascular ultrasound markets, the company completed the layout of systemic intervention, obstetrics, cardiovascular intervention and veterinary ultrasound in the field of ultrasound in 2023, which basically covered all major market areas.
Endoscopy: The core driving force for the company's performance growth, which is expected to maintain a rapid growth trend.
In 2023, the company's endoscopy business achieved revenue of 850 million yuan, an increase of 39.02% over the previous year. On the basis of launching a variety of high-end endoscopes in 2022 (including ultra-fine electronic gastroenteroscopes, optical amplification electronic gastroenteroscopes, adjustable stiffness electronic colonoscopy, electronic ring scan ultrasound endoscope EG-UR5, electronic fan scan ultrasound endoscope EG-UC5T, etc.), the company refined, upgraded and mass-produced the above high-end products in 2023, especially optical magnifying endoscopes and ultrasound endoscopes. Product stability and supply increased rapidly. In 2023, the company launched the HD-580 series endoscope. The HD-580 series endoscope optimizes the optical design, comprehensively improves the full-band resolution of various lenses, can provide higher resolution, improve the clarity, detail and far-field brightness of images, effectively reduce noise and particles through AI image noise reduction technology, deeply meet clinical needs, and achieve coverage of departments related to digestion, respiratory, and biliary and pancreatic surgery. In addition, the company also launched the ED5GT, the first electronic duodenal endoscope with a detachable head in China, and UM-1720, the first domestic ultrasound probe for bronchoscopy, further expanding the clinical application range of the company's endoscopic products.
Overseas business: The layout is continuously improved, integrating localization, academic interaction, and product promotion.
In 2023, the company's overseas business achieved revenue of 939 million yuan, accounting for 44.31% of total revenue, an increase of 18.24% over the previous year. The company's overseas business has made great progress in new product promotion, global academic interaction, and localization construction. By continuously improving the operating efficiency and service level of the company's overseas subsidiaries and service centers around the world, the company has established a more efficient management system and execution mechanism in overseas markets, laying a solid foundation for the company to further accelerate the overseas localization layout and efficient operation of overseas business.
(1) Ultrasound: The company's portable ultrasound X series and E series have expanded market space, user groups and applicable departments through diversified channels, and sales have continued to grow. The company's high-end ultrasound products equipped with a full range of cutting-edge artificial intelligence technology have been iteratively upgraded and released globally, and a new Cupid series ultrasound solution has been launched, creating more opportunities for the company in the middle and high-end ultrasound markets and basic medical care markets in overseas markets. Rapid growth has been achieved in the European and American markets by deepening the construction of localized subsidiaries, expanding the size of the localization team, and rapidly introducing new intelligent ultrasound products.
(2) Endoscopy: With the continuous enrichment of the endoscope product line and the strengthening of market channels, the company's overseas marketing channels continue to improve in quantity and quality. The endoscopic ultrasound system (EUS), which represents the most advanced level in the industry, has received unanimous praise from overseas experts and users. In the past two years of promotion, it has been sold and installed in 25+ countries, and has received positive feedback on use.
(3) Veterinary medicine: As an emerging global market, the company launched the animal-specific ultrasound product ProPET series model and the animal-specific integrated endoscopic product V-2000 in a targeted manner, and built a comprehensive veterinary medical product solution, opening up a new growth path for the continuous growth of the company's business.
Investment advice:
Buy-A investment rating, 6-month target price of 47.61 yuan. We expect the company's revenue growth rates from 2024 to 2026 to be 23.0%, 27.6%, and 25.4%, respectively, with outstanding net profit growth rates of 28.9%, 31.0%, and 30.1%, respectively; maintaining the investment rating given to Buy-A, the target price for 6 months is 47.61 yuan, which is equivalent to a dynamic price-earnings ratio of 35 times that of 2024.
Risk warning: policy impact on medical equipment procurement; uncertainty about the release of new products; uncertainty about products under development.