On April 22, 2024, the company released the 2023 Annual Report and the 2024 First Quarter Report. In 2023, the company achieved revenue of 509 million yuan, +37% year over year; net profit of 217 million yuan, +50% year over year; realized net profit of 212 million yuan, +48% year over year; 2024Q1 achieved revenue of 112 million yuan, +23% year over year; net profit to mother of 52.78 million yuan, +54% year over year; realized net profit without return to mother of 48.27 million yuan, +41% year over year.
The core business grew rapidly throughout the year, and domestic and international sales expanded simultaneously. Looking at the revenue structure by product in 2023, the company's GI category (hemostasis+biopsy) achieved revenue of 336 million yuan, +34% year over year; EMR/ESD category achieved revenue of 105 million yuan, +51% year over year; ERCP achieved revenue of 37.9 million yuan, +29% year over year; and diagnosis and treatment instruments achieved revenue of 27.53 million yuan, +39% year over year. By region, the domestic business achieved revenue of 261 million yuan, +38% over the same period. The number of domestic covered terminal hospitals exceeded 2,300, of which the coverage rate of tertiary hospitals was 44%; the overseas business achieved revenue of 245 million yuan, +37% over the same period last year, and the number of new overseas customers increased 35%.
Production efficiency has improved significantly, and profit margins have continued to rise. The company's gross margin for the full year of 2023 reached 70.87%, +2.75pct year-on-year, mainly due to improvements in production efficiency and the ability to bargain on the scale of upstream raw materials. At present, the company has automated multi-process assembly of products such as electric coils, biopsy forceps, clip devices, etc. In 2023, the gross margin of GI products increased by 4.13 pcts year on year, and the gross margin of EMR/ESD products increased by 4.01 pct year on year. In 2024, the company's gross margin reached 71.78% in Q1, +1.28pct year-on-year, and profit margins continued to rise.
Focus on key product research and development, and lay out new products in the field of endoscopic equipment. The company invested +31% in R&D in 2023. The newly established wholly-owned subsidiary Hangan Medical will focus on research and development of diagnosis and treatment equipment. Currently, it has laid out equipment fields including soft endoscopes, optical fiber imaging (multi-modal imaging technology), and adjuvant treatment robots, etc., and has gradually formed a new core technology layout. The future will become the company's new long-term growth engine after diagnosis and treatment consumables.
Due to recent volume purchases in some domestic regions that may have an impact on product prices, we lowered the company's net profit to mother in 2024-2025 to 260 million yuan (-8%) and 331 million yuan (-9%). We expect net profit to be 416 million yuan in 2026, up 20%, 27%, and 26% year-on-year respectively. The current price corresponds to PE at 16, 12, and 10 times, maintaining the “gain” rating.
Health insurance fee control policy risks; risk of developing projects falling short of expectations; risk of product promotion falling short of expectations; exchange risk.