Key points of investment:
The 2023 and 2024Q1 results are in line with expectations: in 2023, the company achieved operating income of 2,411 million yuan, a year-on-year increase of 22%; realized net profit of 486 million yuan, an increase of 47% over the previous year; realized net profit deducted from non-mother of 463 million yuan, an increase of 55% over the previous year. The company released its 2024 quarterly report during the same period. During the reporting period, it achieved operating income of 620 million yuan, an increase of 13% over the previous year, and realized net profit of 143 million yuan, an increase of 41% over the previous year. The company's 2023 annual report and 2024 quarterly results are in line with market expectations.
Domestic endoscopic consumables recovered after the epidemic and fully blossomed overseas: by region: Asia-Pacific revenue in 2023 was 1.3 billion yuan, up 18.9% year on year; EMEA revenue was 411 million yuan, up 30.9% year on year; MTU revenue was 471 million yuan, up 22.6% year on year; Kangyou Medical's revenue was 213 million yuan, up 24.4% year on year. By product, endoscopic consumables revenue was 2,022 million yuan, up 26.36% from the same period last year, including EMR/ESD revenue of 351 million yuan, up 37.94% year on year, ERCP revenue of 173 million yuan, up 57.6% year on year, tumor ablation revenue of 186 million yuan (of which microwave ablation needles revenue was 174 million yuan, up 41.06% year on year), and visualization products achieved revenue of 97 million yuan, a decrease of 93 million yuan over the same period last year.
Increased gross margin and declining expense ratio: According to the company's 2023 annual report and 2024 quarterly report, the company's gross margin in 2023 was 64.50%, 2024Q1 was 68.31% (60.95% in 2022). Cost control measures combined to increase the share of direct sales, and the company's gross margin showed an upward trend. In 2023, the company's sales expenses ratio was 23.74% (21.88% in 2022), the management expense ratio was 13.63% (15.61% in 2022), and the R&D expenses ratio was 6.25% (8.35% in 2022). Under the improvement of quality and efficiency, the overall cost rate of the company showed a downward trend.
Maintaining the “gain” rating: Considering domestic macroeconomic policy and environmental factors, the company's profit forecast for 2024-2025 was slightly lowered. The estimated net profit to mother was 611 million yuan and 769 million yuan (previously forecast was 627 million yuan and 822 million yuan), and the profit forecast for 2026 was given for the first time. The estimated net profit to mother was 1,008 million yuan, corresponding price-earnings ratios of 22 times, 18 times, and 14 times, respectively. The company's price-earnings ratio in 2024 was lower than the price-earnings ratio (30 times) of the Shenwan Medical Consumables Index, maintaining the company's “increase” rating.
Risk warning: risk of exchange rate fluctuations, increased market competition, poor recovery after the epidemic