occurrences
The company publishes its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 7.980 billion yuan (yoy -24.78%), net profit to mother of 1,258 billion yuan (yoy -42.91%), deducted non-net profit of 1,123 million yuan (yoy -47.58%), and operating cash flow of 990 million yuan (yoy -64.51%).
2024Q1 achieved operating income of 1,922 million yuan (yoy -21.14%), net profit to mother of 482 million yuan (yoy -19.27%), deducted non-net profit of 456 million yuan (yoy -18.85%), and operating cash flow of 142 million yuan (yoy +205.45%).
Comment:
Multiple factors such as a high base of emergency services, stricter industry compliance, and impairment of company accruals affect the company's apparent profit
The company's revenue in 2023 was 7.980 billion yuan, a year-on-year decrease of 24.78%. The decline in revenue in 2023 was mainly due to sales of emergency rapid test kits and PCR instruments and equipment in 2022, while the profit side decline was greater than the impact of multiple factors on the revenue side: (1) The cost rate for the period was 41.60%, an increase of 6.41 pcts over the previous year. (2) In 2023, the company calculated various asset impairment preparations totaling 195 million yuan, mainly including goodwill impairment charges of 0.3 million yuan formed by the acquisition of Suzhou Bosmey, and 115 million yuan in emergency product inventory impairment preparations.
By business segment, (1) Medical devices: achieved revenue of 3,674 billion yuan (yoy -37.50%) in 2023, accounting for 46.04% (-9.38pct). After excluding in vitro diagnosis business, revenue increased 6.70% year over year. Among them, coronary implant intervention increased by 2.9%, structural heart disease increased 29.08%, surgical anesthesia increased 9.37%, and in vitro diagnosis decreased by 77.79%. (2) Pharmaceuticals: Achieved revenue of 3,044 billion yuan (yoy -11.47%) in 2023, including 2,633 billion yuan (yoy -11.90%) for formulations and 411 million yuan for APIs (yoy -8.60%). The company is deeply involved in the OTC market, driving the decline of sales channels such as counties. A number of generic drugs won the bid for the Guangdong Alliance in January 2024. The GLP-1/gcGR/GIP-FC fusion protein MWN101 independently developed by the subsidiary Minwei Biology has carried out phase II clinical trials for type II diabetes and obesity. This product is the first GLP-1/GCGR/GIP-fc three-target GLP-1 product in China to enter clinical phase II. (3) Medical services and health management: In 2023, revenue of 1,262 billion yuan (yoy -2.37%) was achieved, excluding emergency related revenue, which increased 6.53% year on year. Among them, revenue of Hefei Cardiovascular Hospital increased 42.45% year on year, and surgery increased 33% year on year.
2024Q1 improved significantly. The innovative product portfolio will drive the company's growth in the first quarter of 2024. In the first quarter of 2024, the company achieved operating income of 1.922 billion yuan, a year-on-year decrease of 21.14%, a year-on-year increase of 11.70%, and realized net profit of 482 million yuan, a year-on-year decrease of 19.27%, and realized a steady recovery trend of 456 million yuan under policy disturbances (2023Q4 achieved operating income of 1,721 billion yuan, net profit to mother - 163 million yuan).
The company also pays attention to innovative research and development, and the innovative product portfolio will support the company's future development. The company spent 889 million yuan (-8.11%) on R&D in 2023, 11.02% (+2.00pct), 2024Q1 R&D expenses of 197 million yuan (-14.06%), and R&D expenses of 10.27% (+0.85pct). In the coronary sector, the drug-cutting product portfolio has rapidly supported the decline in revenue brought about by the company's coronary stent collection over the past 2-3 years. Currently, in the coronary field, the company's newly launched sonic balloon is also expected to become a new major product. In the field of structural heart disease, the company MemoSorb? Biodegradable ovalbular hole unsealed devices have been approved, and it is expected that radiofrequency atrial septal puncture systems and TAVR products will also be approved for marketing in the first half of 2024. In the pharmaceutical field, the GLP-1/gcGR/GIP-fc fusion protein MWN101 independently developed by Shanghai Minwei Biology, a holding subsidiary of the company, has carried out phase II clinical trials for type II diabetes and obesity, becoming the first domestic product of the same type to enter phase II clinical trials. It is expected that phase II clinical trials will be completed within 2024, and phase III clinical trials will be completed in 2025Q1.
Investment advice
We have increased our 2026 performance forecast. The company's revenue for 2024-2026 is expected to be 9.051 billion yuan, 10.232 billion yuan, and 11,589 billion yuan respectively, with revenue growth rates of 13.4%, 13.0% and 13.3% respectively. Net profit to the mother in 2024-2026 will reach 2,058 billion yuan, 2,368 billion yuan and 2,754 billion yuan respectively, with growth rates of 63.6%, 15.0% and 16.3% respectively. 1.26 yuan and 1.46 yuan, corresponding to 2024-2026 PE is 13x, 11x, and 10x, respectively. The company is a platform-based enterprise in the cardiovascular field. Considering that the company's innovative products such as absorbable stents have entered the release stage, innovative devices are growing strongly in the research pipeline and maintain a “buy” rating.
Risk warning
CGM sales fall short of anticipated risk.
There is a risk of unforeseen losses in the operation of overseas subsidiaries.
Market competition heightens risk.