Incident: The company released its annual report in 2012. In 2023, it achieved operating income of 1,176 million yuan (yoy +21%), net profit attributable to mother of 170 million yuan (yoy +36%), net profit of 149 million yuan (yoy +31%), and net cash flow from operating activities of 15.1 million yuan (yoy -49%).
Comment:
Intelligent manufacturing and rehabilitation medicine go hand in hand, and profitability is constantly improving. In 2023, the company thoroughly implemented the “integrated two-wing, two-wheel drive” development strategy, and achieved a steady increase in operating revenue of 1,176 million yuan (yoy +21%). Among them, the intelligent manufacturing sector achieved breakthroughs in non-pharmaceutical fields such as non-food fermentation, new materials, food, etc., and achieved operating income of 850 million yuan (yoy +21%). The rehabilitation medical sector achieved operating income of 325 million yuan (yoy +20%) with the help of the expansion of the primary health care market. In terms of profit level, the company's net sales margin in 2023 was 14.27% (yoy+1.36pp), achieving net profit of 170 million yuan (yoy +36%), of which the intelligent manufacturing sector's net profit to mother was 85 million yuan (yoy +43%), and the rehabilitation medical sector's net profit to mother was 85 million yuan (yoy +30%). The net profit of both businesses grew faster than revenue. We think it was mainly due to increased business gross margin and enhanced cost control capabilities. The gross margin of the sales company in 2023 was 42.93% (yoy +43%) +1.36pp), the sales expense ratio and management expense ratio both declined, to 9.50% (yoy-0.64pp) and 7.31% (yoy-1.7pp), respectively.
Lay out the cutting edge and explore the field of brain science by combining industry, education, and research. The company adheres to an innovation system centered on cultivating independent R&D capabilities and guided by industry-university-research strategic cooperation. In 2023, the company invested 73.5 million yuan (yoy +15%) in R&D, accounting for 6.25% of revenue, which is basically the same as in 2022.
With continuous R&D investment, the company launched the first intelligent detection product “online near-infrared spectrometer” in the field of intelligent manufacturing to achieve a closed loop of production automation; in the field of rehabilitation medicine, the company focused on clinical needs, carried out in-depth cooperation with many well-known universities around “brain-computer interface”, and established “Beijing Brain Link Technology Co., Ltd.” in March 2024, which is committed to applying brain-computer interfaces to the field of rehabilitation. By promoting neural pathway reconstruction, the company can restore brain function and make rehabilitation “passive” into “active”.
Profit forecast: We expect the company's revenue for 2024-2026 to be 1,420, 17.07, and 2,048 billion yuan, respectively, with year-on-year growth rates of 20.8%, 20.2%, and 20.0%, respectively, and realized net profit of 2.23, 2.95, and 385 million yuan, up 30.9%, 32.4%, and 30.6% year-on-year respectively, corresponding to the current stock price PE 20, 15, and 12 times, respectively.
Risk factors: risk of product development and registration failure; risk of increased market competition; risk of falling product prices.