Key points of investment

Incident: The first quarter of 2024 achieved revenue of 455 million yuan (+30.20%, indicating year-on-year growth rate, same below), net profit of 140 million yuan (+36.48%) to mother, net profit of 137 million yuan (+51.59%) after deducting non-return to mother net profit of 137 million yuan (+51.59%). 2024Q1 revenue was in line with expectations, and profit exceeded our expectations.

Expenses were well controlled, and gross margin and net profit margins increased month-on-month. 2024Q1 achieved gross profit margin of 72.01%, net profit margin of 30.28%, 2023Q4 gross margin of 70.95%, and net profit margin of 28.77%. 2024Q1 has sales expenses of 88 million yuan (+26.91%), sales expense ratio of 19.29%; management expenses of 0.24 million yuan (+35.71%), management expense ratio of 5.33%; R&D expenses of 66 million yuan (+24.73%), R&D expenses rate of 14.41%.

After completing the share transfer, Mindray Holdings is expected to collaborate in the second quarter. On January 28, 2024, Cheng Zhenghui and Cheng Ling, the actual controllers of the company, intend to transfer a total of 9,173,558 shares of listed companies to Shenzhen Mai Control (Mindray Healthcare subsidiary) at a price of 471.12 yuan/share through an agreed transfer, accounting for a total of 13.72% of the total share capital. As of April 26, Shenmai Holdings directly held about 14.12 million shares of the company, accounting for 21.12% of the company's total share capital. Zhuhai Tongsheng, a concerted actor of Shenmai Holdings, held 2,335,296 shares of the company, accounting for 3.49% of the company's total share capital. In total, Shenmai Holdings and its co-actor, Zhuhai Tongsheng, held about 16.46 million shares of the company, accounting for 24.61% of the company's total share capital.

A new peripheral thoracic aortic laminating stent was launched domestically, further enhancing peripheral competitiveness. On April 19, 2024, the company's aortic laminating stent was launched domestically. This product is suitable for intravenous interventional treatment of Stanford B-type aortic dissection. According to the company's presentation at the CVC2023 conference, the company's product uses an ultra-thin coating, has a finer outer diameter, and the optimized seamless multifilament polyester coating density neither causes internal leakage, but is also conducive to endometrial hyperplasia.

Profit forecast and investment rating: Considering the amount of new products released on the outside of the company, we adjusted the company's net profit from RMB 7.04/9.10/1,163 million yuan to RMB 723/9.76 billion yuan. The corresponding valuation is 44/32/24X, maintaining the “buy” rating.

Risk warning: Risk of major changes in industry policies, risk of product sales promotion falling short of expectations.