Incident: On April 22, 2024, the company announced that it achieved operating revenue of 509 million yuan in 2023, an increase of 37.09% over the previous year, due to the company's active development of the global market, and continued to maintain a high growth rate in the Chinese and US markets, and the rapid growth in sales volume of GI, ERCP, ESD/EMR products; achieved net profit of 217 million yuan, an increase of 49.86% over the previous year, due to sales growth driving revenue growth and an increase in the revenue share of GI products with high gross margins; gross margin was 70.87%, same as 2.75pct more than that. The first quarter of 2024 achieved operating income of 112 million yuan, up 23.35% year on year; net profit to mother of 53 million yuan, up 54.22% year on year; gross margin was 71.78%, up 1.28 pct year on year.
The sales expense ratio and management expense ratio have increased. In 2023, the company's sales expenses ratio and management expense ratio were 9.77% and 8.98%, respectively, up 0.53 pct and 0.28 pct year on year, R&D expenses rate was 8.11%, down 0.37 pct year on year. The increase in expenses is due to the increase in the company's expenses such as personnel wages and management costs in order to consolidate and increase market share and develop business channels. In the first quarter of 2024, the company's sales expense ratio, management expense ratio, and R&D expense ratio were 11.37%, 11.20%, and 10.30%, respectively, up 1.61 pct, 2.31 pct, and 2.58 pct year-on-year.
Both domestic and foreign revenues have grown rapidly. In 2023, the company's domestic sales revenue was 261 million yuan, up 37.57% year on year; overseas revenue was 245 million yuan, up 36.78% year on year; while continuing to optimize new products, the company paid attention to the construction of a domestic marketing network. The number of domestic terminal hospitals covered exceeded 2,300, of which the coverage rate of tertiary hospitals was 44%. In the international market, overseas customer development efforts have been strengthened. Both the number of customers and the coverage area have achieved good growth. The number of new overseas customers has increased by 35%, and 2 high-quality major customers have been introduced at the same time. With the European company's location selection and implementation, it has laid a good foundation for future overseas market sales expansion.
Investment advice: The company is expected to have revenue of 6.43, 8.40, and 1,101 billion yuan in 2024-2026, up 26.4%, 30.6%, and 31.1% year on year; net profit to mother of 2.70, 3.51, and 464 million yuan, up 24.3%, 30.1%, and 32.2% year on year; maintain the “increase” rating.
Risk warning: market competition increases risk; risk of product quality; risk of trade friction and exchange rate fluctuations; risk of policy changes; risk of volume procurement; risk of macro-environmental risk; risk of brain drain;