The 1Q24 company has returned to a rapid development path, maintaining that the “buy” rating company achieved revenue/net profit of 19.2/4.4 billion yuan (yoy -22.8%/-50.9%) in 23 years, which is lower than our expectations (estimated revenue/net profit yoy -19.5%/-34.8%). We speculate that the main reason is that the company continues to adjust the marketing management model and superimpose factors external to the industry to influence the pace of product release in the short term. The company achieved net revenue/return to mother of 74/280 million yuan (yoy +30.0%/+44.9%) in 1Q24, and the company's operating margin improved markedly and returned to a rapid growth trajectory (revenue/net profit to mother qoq +70.6%/+2118.3%).
Considering the continued improvement in the company's product sales, we adjusted the 24-26 EPS forecast to 1.00/1.33/1.71 yuan (the value was 0.87/1.05 yuan 24/25 years ago). The company is a leader in the domestic hemoperfusion industry. The product layout is comprehensive and industry recognition continues to increase. It gave a 24-year PE valuation of 34x (comparable to the company's Wind's consistent expected average value of 30x), corresponding to a target price of 33.89 yuan (previous value 25.23 yuan), and maintained a “purchase”.
Continuously optimizing product promotion and R&D investment efficiency, the cash flow level improved markedly, and the company's 1Q24 gross margin was 78.7% (yoy-1.7pct). We estimate that the main reason is the increase in revenue share of some low-profit products (such as blood purification equipment, dialysis powder, etc.). 1Q24 sales, management and R&D expenses ratio is 21.3%/5.2%/7.3% (yoy-6.1/+0.3/-2.2pct). The company continues to optimize the efficiency of sales promotion and new product R&D expenditure to further improve the quality of operations. The company's net cash flow from 1Q24 operating activities was 5.1 billion yuan (yoy +111.9%), and the cash flow level improved significantly.
1Q24 Sales of the company's core products have returned to a rapid pace of growth
The company's revenue from hemoperfusion devices/bilirubin adsorbers was 1,47/90 million yuan in 23 years (yoy -27.5%/-20.1%), but 1Q24 has returned to a rapid growth pace (the company's 1Q24 hemoperfusion devices and adsorber products total revenue of 690 million yuan, yoy +85.5%). The company's core product market competitiveness is reflected in: 1) wide coverage of hospitals: by the end of 23, the company's nephrology and hepatology products covered more than 6000/2000 hospitals respectively; 2) sufficient evidence-based evidence: the health economy research results of nephrology HA series products have been officially published, and hepatology DPMAS was recommended by relevant domestic guidelines for the first time and published important clinical research results; 3) Smooth promotion of new products: Nephrology KHA series products earned YOY +79.5% in 23 years. We are optimistic that sales of the company's core products will maintain a positive trend in 24 years.
The business coverage continues to expand, and we are optimistic about contributing positively to the increase in performance
The company's marketing for new products and new scenarios continues to strengthen, including: 1) Blood purification equipment: 23 million yuan in revenue (yoy +19.3%); of these, the star product DX-10 blood purifier achieved revenue of 230 million yuan (yoy +22.6%) in 23 years. Up to now, it has covered about 1,800 hospitals across the country, with a total installed capacity of nearly 4,000 units. 2) Emergency and critical illness: The company's emergency and critical care products have covered more than 1,600 hospitals as of 23 years. We are optimistic that the company's business area will continue to expand and actively contribute to the increase in performance.
Risk warning: Sales of core products fall short of expectations, and product tenders reduce prices.