Incident: The company released its report for the first quarter of 2024. In the first quarter of 2024, it achieved operating income of 1,021 million yuan (+16.62%), net profit to mother of 426 million yuan (+20.04%), net profit of 399 million yuan (+25.49%), and operating cash flow of 262 million yuan (+45.73%).
First-quarter results were in line with expectations, and overseas business continued to grow rapidly. By region, 1) Domestic:
2024Q1's main domestic business revenue increased 12.17% year on year, which is expected to be mainly affected by changes in the industry business environment and the release of hospital diagnosis and treatment volumes falling short of expectations; 2) Overseas: 2024Q1's main business revenue increased 24.95% year on year. With the rapid increase in the number of installed machines in overseas markets and a further increase in the share of medium and large machines, the company's overseas business is expected to continue to grow rapidly.
High-speed machine installation is progressing smoothly, driving future reagent volumes. 2024Q1's revenue from the reagent business increased 26.42% year on year, and revenue from instrument products decreased by 3.86% year on year. It is expected to be mainly due to the impact on the pace of domestic installations and admissions. The company's high-speed installed performance in the first quarter was impressive. The fully automatic light-emitting instrument MAGLUMIX8 achieved sales and installation of 220 units in domestic and foreign markets. The steady growth in the company's installed capacity of medium and large machines and assembly line products at home and abroad laid a good foundation for the company's future reagent intake.
Gross margin increased markedly year over year, and profitability is expected to continue to improve. 2024Q1's gross margin was 73.84%, up 5.16 percentage points from the previous year. It is expected to be mainly due to revenue structure optimization, that is, an increase in the share of the high-margin reagent business. Due to the company's increased sales promotion and R&D efforts, and the year-on-year increase in employee compensation/depreciation/amortization, etc., the cost ratio increased during the 2024Q1 period. Among them, the sales expense ratio was 15.61% (+1.31pct), the management expense ratio was 2.87% (+0.49pct), and the R&D expense ratio was 9.93% (+0.43pct).
In the future, the company's overall profitability is expected to be further enhanced as cost reduction and efficiency increases, production costs are diluted due to product release, and the revenue structure continues to be optimized due to reagent release.
Investment advice: The company is a domestic chemiluminescence leader. High-end models and assembly lines at home and abroad continue to be installed, driving rapid growth in the reagent business. We expect the company's net profit from 2024 to 2026 to be 20.63/25.42/3,069 billion yuan, up 24.77%/23.18%/20.76% year-on-year, and EPS of 2.63/3.23/3.91 yuan respectively. The current stock price corresponding to 2024-2026 PE is 27/22/18 times, maintaining the “recommended” rating.
Risk warning: risk of overseas market expansion falling short of expectations, risk of price reduction exceeding expectations due to collection, risk of falling short of expectations in reagent intake, risk of increased industry competition