Incident: On the evening of April 25, 2024, the company released its report for the first quarter of 2024: operating income of 89 million yuan, up 71.01% year on year, mainly due to the company actively exploring domestic and foreign markets. The products were widely recognized by the market, compounded by the positive impact of volume procurement policies. The company's product sales increased significantly over the same period last year; net profit to mother was 0.04 billion yuan, up 144.70% year on year; net cash flow from operating activities was 0.06 million yuan, an increase of 145.41% year on year, mainly due to Profit increased due to the increase in the company's operating income. At the same time, the company strengthened cost control, and the operating expenses ratio dropped sharply compared to the same period last year.
The collection of products accelerates the release of products, and the acceptance of new products continues to expand the atrial fibrillation market (1) Pressure catheters: The number of surgeries using pressure catheters exceeded 1,000 in 2023, and the use of pressure catheters and high-density measurement catheters continued to grow rapidly in the first quarter of 2024. We expect that pressure catheters will be rapidly released in Beijing, Tianjin, Hubei and other places this year, which is expected to expand the atrial fibrillation market and replace part of the atrial fibrillation market.
(2) Frozen series products: Obtained a domestic registration certificate in August 2023. Up to now, the Internet connection has been completed in more than 20 provinces, and clinical surgery trials have been carried out at various head centers. The frozen product line has applied for procurement in Beijing and won the bid from the Tianjin and Hubei alliances, which is expected to further seize share in the field of atrial fibrillation.
(3) PFA: Up to now, the pressure pulse project has entered the follow-up phase. Shangyang Medical's OneShot PFA program follow-up is nearing completion, and we expect certification in the first quarter of 2025.
(4) RDN: In March 2024, it passed the National Drug Administration (NMPA) special examination application for innovative medical devices and entered the “green channel” of the special review process.
(5) Others: The magnetic navigation surgical robot is in the registration application stage, and other pipeline products are also being developed (such as intracardiac ultrasound catheters).
Profitability analysis, strengthened cost control, and net interest rate increased significantly in the first quarter of 2024. The company's comprehensive gross profit margin, sales expense ratio, management expense ratio, R&D expense ratio, financial expense ratio, and overall net interest rate were 60.54%, 27.49%, 11.50%, 22.17%, -1.17%, and 4.68%, respectively, with changes of -7.78pct, -10.78pct, -2.84pct, -22.82pct, +1.05pct, and +22.57pct, respectively. The reason we expect the reduction in gross margin is due to the impact of volume procurement and changes in the revenue structure due to an increase in the share of products with low gross margin; the significant increase in net margin is mainly due to the scale effect brought about by the increase in the company's operating income, as well as a significant reduction in sales expenses and R&D expenses.
Profit forecast and investment rating: We expect the company's revenue for 2024-2026 to be 477 million/671 million/903 million yuan respectively, with year-on-year growth rates of 45%/41%/35%; net profit to mother of 49 million/ 90 million/ 158 million yuan, respectively; year-on-year growth of 761%/83%/76%; EPS of 0.10 /0.19/0.34, respectively, corresponding to 250 times PE in 2024, according to the closing price on April 25, 2024. Maintain a “buy” rating.
Risk warning: Risk of falling product prices due to industry policies, risk of market competition, risk of failure and registration of new products, risk of loss of scientific research and management talent.