Incident: The company released its 2024 quarterly report, achieving operating income of 331 million yuan, a year-on-year decrease of 18.57%, achieving net profit of 101 million yuan, a year-on-year decrease of 19.30%, and net profit withheld from non-return to mother of 96 million yuan, a year-on-year decrease of 21.97%; lower than market expectations.
2024Q1 revenue is under pressure, and contract debt performance is good to support subsequent results.
(1) Growth analysis: In the first quarter of 2024, the company achieved operating income of 331 million yuan, a year-on-year decrease of 18.57%; realized net profit of 101 million yuan, a year-on-year decrease of 19.30%; mainly due to the impact of operating hours, the first quarter of the company's equipment sales was off-season. The company returned in late February 2024 to start a peak season operation. The actual operating time was limited. Historically, the February New Year had an impact to varying degrees. For example, 2013 Q1, 2015Q1, and 2018Q1 revenue was -10.17%, - 4.08%, +0.43% The company's orders grew well. At the end of the first quarter of 2024, contract debt reached 81.20.48 million yuan, up 64.34% from the beginning of the year and 17.10% year-on-year, providing strong support for the second quarter results.
(2) Profitability analysis: In the first quarter of 2024, the company's gross sales margin was 51.09%, down 2.70pct year on year, and 1.22pct month-on-month increase, mainly because since the second quarter of last year, prices of the company's products were reduced due to competitive pressure in the dental industry, which put a year-on-year pressure on prices in the first quarter of this year; the net sales margin was 30.45%, down 0.27pct year on year, and remained relatively high. Looking at recent years, gross margin and net interest rates are at the company's average level. The products are still very competitive, and the net interest rate is far higher than that of peers. In the first quarter of 2024, the sales/management/finance expense ratios were 10.08%, 7.31%, and -6.95%, respectively. The year-on-year ratio was +3.51 pct, +2.01pct, and -7.91 pct, respectively. The decline in financial expense ratios was mainly due to the increase in the company's exchange earnings.
(3) Analysis of operating capacity and operating cash flow: The company's inventory turnover in 2023 was 250.00 days, an increase of 17.86 days over the previous year, and the number of accounts receivable turnover days was 149.58 days, an increase of 68.01 days over the previous year, mainly due to the increase in the revenue share of color sorters with long accounts under competitive pressure in the dental industry, affecting short-term operating capacity. Overall, the company has excellent operating capacity far higher than its peers; the net operating cash flow was 56.5598 million yuan, which was negative year-on-year, mainly due to reduced sales revenue, increased procurement and payment, and employees Cash payments increased; a quick correction is expected after the release of revenue results for the second quarter.
(4) Continuously increase investment in R&D: In the first quarter of 2024, the company invested 24.9707 million yuan in R&D, up 3.69% year on year, accounting for 7.53% of revenue, up 1.61 pct year on year. By the end of 2023, the company had 112 authorized valid invention patents (including 3 foreign authorized invention patents), 242 utility model patents, and 50 design patents. With high-intensity R&D investment, new products are repeatedly launched in various business segments of the company, effectively enhancing the competitiveness of the product market.
Mouth scanners “issued all four certificates” overseas, and mobile CT shined at the CMEF exhibition.
(1) In the field of dentistry, the company's mouth scanner myScan3 uses the latest optical technology and image processing algorithms to quickly and accurately obtain three-dimensional data of patients' mouths, providing doctors with a comprehensive and detailed basis for diagnosis. On April 22, the company announced that the scanner had successfully obtained several overseas regional registration certificates, including US FDA listing, EU Class I product registration certificate, UK market entry permit, and Colombian market entry permit, indicating that the quality of the company's products has been recognized by the international market and has also provided effective support for the company's overseas business development.
(2) The company not only continues to make breakthroughs in the field of dentistry, but also extends technology to various departments such as orthopedics, neurosurgery, and otolaryngology. On April 11-14, the 89th China International Medical Equipment Fair (CMEF) was held in Shanghai; the company's mobile head CT became the focus of attention. The product is specially designed to move the medical imaging test scene forward and can be used in emergency departments, neurosurgery, otolaryngology, etc., to reduce the risk of patient transportation, reduce the possibility of secondary injury, and have significant advantages of easy mobility, radiation safety, and rapid imaging; what also received attention was the spinal surgery robot, which is mainly used for accurate navigation and positioning of surgical instruments and implants during surgery to promote minimally invasive surgery , developed in the direction of precision, and all clinical performances of this product have reached the first-class level in the industry.
Maintain a “buy” rating. Considering the pressure on the domestic economic environment and intense competition in the dental market, we expect the company's revenue in 2024-2026 to be 2,815 billion yuan, 3.52 billion yuan, and 3,684 billion yuan, respectively, up 16%, 13% year on year; net profit to mother will be 897 million yuan, 1,038 billion yuan, and 1.06 billion yuan respectively, up 20%, 16% year on year; EPS will be 1.02 yuan, 1.18 yuan, and 1.37 yuan respectively; according to the stock price of April 25, 2024, corresponding to PE It was 18.4, 15.9, and 13.7 times, respectively. The dental circuit has growth characteristics, and the reduction in dental implant fees is expected to accelerate the penetration rate of equipment in the long term. As a leading domestic dental equipment company, the company is speeding up overseas expansion, has a definitive premium, and maintains a “buy” rating.
Risk warning: The development of the food testing industry falls short of expectations; the development of overseas business falls short of expectations; the development of the domestic dental CBCT industry falls short of expectations; the risk of increased competition in the domestic dental CBCT market; the development of chair-side repair systems falling short of expectations; the uncertain impact of exchange gains and losses on the company's performance; the uncertain impact of other operating income on the company's performance.