Matters:
The company released its 2024 quarterly report, with revenue of 306 million yuan (+10.06%), net profit to mother of 107 million yuan (+21.69%), and deducted non-net profit of 103 million yuan (+24.60%).
Commentary:
The international business performed well. By region, 2024Q1, the company's domestic market revenue was 229 million yuan (+3.67%), accounting for 74.8%, and the international market revenue was 77 million yuan (+34.74%), accounting for 25.2% of the international market revenue. The company has established subsidiaries in Russia and Indonesia to further strengthen cooperation and exchange with international markets and overseas business development capabilities, and enhance the international influence of the company's brand.
The IVD business is growing rapidly. 2024Q1's domestic in vitro diagnosis business revenue is 170 million yuan (+28%), and international in vitro diagnosis business revenue is 72 million yuan (+53%).
The domestic treatment and rehabilitation business is expected to decline. By analyzing the company's domestic revenue growth rate and domestic IVD business growth rate, it is expected that the domestic treatment and rehabilitation business will decline to a certain extent in 24Q1. This is expected to be related to last year's high COVID-related base.
Gross margin has increased significantly, and profitability has increased. The overall gross margin of the 2024Q1 company was 69.99% (+4.00pct), the sales expense ratio was 12.80% (-0.69pct), the management expense ratio was 4.96% (+0.12pct), the R&D expense ratio was 11.97% (+0.20pct), the financial expense ratio was -3.11% (-2.29pct), and the net profit margin to the mother was 35.07% (+3.35pct). The increase in gross margin enhanced the company's profitability and drove the increase in net profit to mother, so that the net profit growth rate to the mother exceeded the revenue growth rate. It reached 21.69%.
The company has absorbed the high base impact of the epidemic. At the same time, it is expected that the product admission situation will improve in 2024. On the basis of the continuous strengthening of the company's IVD core competitiveness and continuous expansion of dermatological and aesthetic marketing, it is expected to achieve new performance breakthroughs in 2024.
Investment advice: Based on 2024Q1 results, we expect the company's 24-26 revenue to be 14.3, 18.0, and 2.25 billion yuan, respectively, up 25.2%, 25.2% and 25.1% year-on-year; net profit to mother for 24-26 will be 4.2, 5.3, and 660 million yuan, up 28.1%, 25.6% and 25.3%; EPS will be 0.98, 1.24, 1.55 yuan, and corresponding PE will be 19, 15 and 12 times, respectively. We gave the company a valuation of 29 times in 2024, corresponding to a target price of about 28 yuan, maintaining a “recommended” rating.
Risk warning: 1. The implementation of favorable policies related to rehabilitation products fell short of expectations; 2. The promotion of optoelectronic medical and aesthetic products fell short of expectations; 3. Competition in the IVD market intensified.