Lepu Healthcare announced its 2023 annual report. In 2023, the company achieved operating income of 7.980 billion yuan (year-on-year decrease of 24.78%); realized net profit of 1,258 billion yuan (year-on-year decrease of 42.91%); realized net profit after deduction of 1,123 billion yuan (year-on-year decrease of 47.60%).
Lepu Healthcare announced its 2024 quarterly report. 2024Q1 achieved operating income of 1,922 million yuan (year-on-year decrease of 21.14%); realized net profit of 482 million yuan (year-on-year decrease of 19.27%); and realized net profit after deduction of 456 million yuan (year-on-year decrease of 18.85%).
Opinion: Revenue fluctuations caused a higher base due to emergency product sales during the same period. Multiple factors affected the profit side's decline more than the revenue side. 2024Q1 cardiovascular implant intervention resumed steady growth, and the structural heart disease business continued to grow rapidly. The research pipeline is progressing smoothly, returning to a new normal of innovation-driven growth.
The decline in revenue in 2023 was affected by emergency product sales during the same period. Multiple factors affected the profit side's decline more than the revenue side. The decline in revenue in 2023 was mainly due to sales of emergency rapid test kits and PCR instruments in the same period last year, leading to a high base. The profit side decline was greater than the impact of multiple factors on the revenue side: 1) The cost rate for the period was 41.60%, an increase of 6.41 pct over the previous year. 2) Accumulated impairment of goodwill and other specific assets totaled $148 million, affecting net profit attributable to mother of approximately $126 million. Excluding the effects of the above impairment and equity incentive expenses, the company achieved net profit of 1,386 billion yuan after deduction (down 37.68% year over year).
2024Q1 revenue improved month-on-month and is expected to reinvigorate growth. 2024Q1 revenue increased 11.70% month-on-month. We estimate that the impact of emergency product sales has largely been cleared, and good growth is expected in 2024. Cardiovascular implant intervention has returned to a new normal of innovation and growth. The 2024Q1 equipment segment's revenue was 886 million yuan, down 18.69% year on year, mainly due to the IVD business falling 69.53% year on year. Cardiovascular implant intervention in the core business increased by 12.63% year-on-year, up 35.68% month-on-month, and resumed steady growth. Among them, the structural heart disease business achieved revenue of 113 million yuan, up 66.77% year on year and 45.45% month on month. The API business is growing steadily. The company's pharmaceutical segment revenue was 793 million yuan (down 15.69% year on year), of which the API business increased 19.15% year on year and maintained steady growth.
Product clusters continue to be enriched, and innovative products are being commercialized one after another. The company continues to promote the research and development of innovative cardiovascular implantation products. September 2023 memoSorb? The biodegradable ovalbular hole unclosed occluder was approved, making it the world's first biodegradable ovalvular hole unblocked device; in January 2024, disposable coronary intravascular shock wave catheters/devices and coronary mastoid balloon dilatation catheters were approved, and major products entered the commercialization stage one after another. The development of the company's important innovative products is progressing smoothly, laying a solid foundation for continued growth in performance.
Profit forecasting and investment advice. We expect the company's revenue for 2024-2026 to be 88.98, 98.59 billion yuan, 10.884 billion yuan, respectively, up 11.5%, 10.8%, and 10.4% year on year; net profit to mother will be 20.02, 23.30, and 2,694 billion yuan, respectively, up 59.1%, 16.4%, and 15.6% year on year; corresponding PE will be 13X, 11X, and 10X respectively, maintaining the “buy” rating.
Risk warning: collection risk, risk of product development falling short of expectations, market competition exacerbates risk