The 2023 performance was outstanding, and the installed capacity of mid-range and high-end products improved rapidly. In 2023, the company achieved revenue of 678 million yuan (+52.29%), net profit attributable to mother of 58 million yuan (+166.42%), and net profit of non-return to mother of 44 million yuan (+359.03%). Among them, 23Q4 had quarterly revenue of 249 million yuan (+51.68%), net profit attributable to mother of 13 million yuan (-3.55%), and net profit of non-return to mother of 0.07 billion yuan (+35.74%).
The company achieved rapid growth in revenue and profit in 2023, and the market penetration rate of tertiary hospitals was further increased. The number of mid-range and high-end models installed (including winning bids) in tertiary hospitals was 96 units (+269%) and 316 (+212%), respectively, and 73 level-3 hospitals (+192%) installed (including winning the bid).
Profitability has increased, and investment in sales expenses has increased. In 2023, the gross profit margin was 73.78% (+4.06pp), the net profit margin was 8.53% (+3.66pp). The increase in profitability was due to the continuous promotion of the high-end product AQ-300; sales expenses ratio 34.27% (+4.66pp), management expenses ratio 13.40% (-5.54pp), R&D expenses rate 21.68% (basically flat). The company continued to increase the promotion of new products, improve the marketing system, continue to deepen the market coverage and breadth of products, and the sales expense ratio has increased.
Focusing on innovative research and development, the product line continues to be rich. The company continued to increase investment in R&D, with R&D expenses of 150 million yuan in 2023, an increase of 52% over the previous year. It launched new products such as UHD series duodenoscopes, various fine mirror products, AQ-200 Elite endoscopy systems, UHD series bifocal endoscopes, and split upper gastrointestinal endoscopes, further enriching the product line and increasing department coverage. In terms of research projects, the company is actively developing 3D soft endoscopes and endoscopic robots, and future product launches are expected to further enhance market competitiveness.
Investment advice: The company's 2023 performance achieved rapid growth, product richness and tertiary hospital terminal coverage were further improved, and profit forecasts for 2026 were added. The expected revenue for 2024-26 was 9.9/14.4/2.02 billion yuan, a year-on-year growth rate of 46.1%/45.8%/39.7%, net profit to mother of 1.0.0/1.7/260 million yuan, and a year-on-year growth rate of 71.3%/73.2%/52.7%. The current stock price corresponds to PS = 7/5/4x. Optimistic that the company's high-end products will continue to drive performance, and maintain a “buy” rating.
Risk warning: Risk of marketing falling short of expectations; risk of increased competition; risk of exchange rate fluctuations.