Under a high base, 1Q24's revenue continued to maintain an upward trend, maintaining that the “buy” rated company 1Q24 achieved revenue of 479 million yuan (yoy +1.3%), net profit of 100 million yuan (yoy -27.7%), and net profit after deducting non-return to mother of 92 million yuan (yoy -26.6%), mainly due to factors such as 1Q23's product sales revenue associated with a recovery in routine diagnosis and treatment needs after the epidemic. We maintain our profit forecast and expect EPS of 1.37/1.79/2.32 for 24-26. The company is a leader in the field of domestic ultrasound and endoscopy. The product matrix continues to expand and market competitiveness continues to improve. The company was given 38xPE for 24 years (comparable to the company Wind's consistent expected average value of 32), corresponding to a target price of 52.20 yuan (previous value of 50.83 yuan), maintaining a “buy” rating.
The gross margin level increased year-on-year. Continued to strengthen sales promotion and product development investment, the company's gross margin in 1Q24 was 69.4% (yoy+0.8pct). The increase in revenue share of high-end products with relatively high gross margin led to an upward trend in overall gross margin levels. 1Q24 sales/management/R&D expense rates were 25.6%/7.2%/21.2%, respectively, yoy+3.3/+1.9/+4.3pct, respectively. The company further strengthened its brand promotion and new product development efforts, and continued to enhance its influence in the industry.
Ultrasound: Optimistic about maintaining an upward trend throughout the year
We estimate that the company's ultrasound sector's 1Q24 revenue performance was stable, with overseas revenue growing faster than domestic revenue.
The company has now implemented a systematic layout on ultra-high-end, high-end and low-end ultrasound platforms, and can provide targeted solutions according to the actual needs of clinical users at different levels. Looking ahead to the full year, considering the excellent performance of the company's ultrasound products and the continued increase in market acceptance, combined with medical equipment trade-in and new medical infrastructure policies, we are optimistic that the annual ultrasound revenue will increase by about 15% year-on-year.
Endoscopy: Revenue from soft microscope equipment is growing rapidly
1) Soft mirror equipment: We estimate that 1Q24 soft mirror equipment revenue grew rapidly year on year, leading the company's overall revenue growth, and product market recognition continued to increase. Looking ahead to the full year of 24, considering that the penetration rate of soft mirror diagnosis and treatment in China continues to increase, and the volume of high-end new products such as HD-580 is being released one after another, we are optimistic that soft mirror revenue will increase by about 40-50% year-on-year for the whole year. 2) Hard mirror: The company's 4K hard mirror products have excellent performance. We are optimistic that it will continue to increase its market influence with industry-leading professional sales teams. We are optimistic that the sector will achieve rapid development in 24 years.
Risk warning: downstream product sales fall short of expectations, policy implementation falls short of expectations, risk of exchange rate fluctuations.