Incident: The company released its 2023 annual report and 2024 quarterly report. In 23, the company achieved total operating revenue/net profit from mother of 79.72/23.96/1,836 billion yuan, up 12.25%/50.21%/46.79% year on year; 24Q1 achieved total operating revenue/net profit attributable to mother/ net profit after deduction of 22.31/6.59/551 billion yuan, a year-on-year decline of 17.44%/7.58%/21.69%. The performance was in line with market expectations.
Comment:
Brand influence continues to increase, and business in various sectors is growing steadily. The company's various business lines progressed smoothly in 23 years. Among them, the respiratory treatment sector led market demand, and its brand power and market share continued to increase. In 23, respiratory treatment solutions achieved revenue of 3.371 billion yuan (YOY +50.55%), the diabetes care sector revenue of 726 million yuan (YOY +37.12%), and the market share of 14-day calibration-free CGM products continued to increase; disinfection sensory control products achieved revenue of 756 million yuan (YOY -36.15%) in 23 years. In addition, the company's overseas business is strengthening territorial construction and is speeding up the registration and introduction of core products from overseas countries.
Investment in R&D continues to be strong, and the business plan shows confidence in development. Gross margin increased by 3.36 pcts to 51.49% in '23, and the share of revenue from high-margin products continued to rise. The company continues to increase investment in R&D, focus on the optimization and construction of R&D teams, strengthen sales and management cost control and financial resource utilization. The overall cost trend is good. In '23, the sales expense ratio was 13.78%, down 0.75 pcts year on year, R&D expenses rate 6.33%, down 0.66 pcts year on year, management expense ratio 5.16%, down 0.76 pcts year on year. The company announced a 24-year business plan. In the future, it will continue to expand the three core tracks of respiratory treatment, diabetes care, and infection control, and actively incubate high-potential businesses such as first aid, ophthalmology, and intelligent rehabilitation; the company will continue to focus on the offline terminal market, focusing on regionalization and urbanization market strategies; the company will continue to promote market expansion in key overseas countries and actively seek cooperation with high-level third parties to jointly build innovation centers.
Profit forecast, valuation and rating: Overall, the company insists on focusing on the three core racetrack businesses and gradually improving management. With R&D investment and technological innovation, the core business is competitive in domestic and global markets. The net profit forecast for 24-25 was raised to 24.21/2,694 billion yuan (the original forecast value was 22.84 billion yuan, up 5.99%/1.90%), and the net profit forecast for the additional 26 years was 3,096 billion yuan. Considering the company's current business growth potential, brand influence is gradually established, and products under development The hierarchy is orderly and the “buy” rating is maintained.
Risk Alerts: Sales fall short of expectations, R&D progress falls short of expectations, management risks, etc.