1Q24 Policy Factors Influence Performance Growth
The company's 1Q24 operating income/net profit attributable to mothers/net profit deducted from non-net profit of 222/0.55/ 0.49 million yuan, -10.0%/-1.2%/-1.5% year-on-year. The 1Q24 performance growth rate is mainly under pressure due to external policy factors affecting the company's product sales.
We expect the 24-26 EPS to be 0.91/1.16/1.48 yuan. We gave the company a 24-year 29x A-share PE valuation (A-share comparable 24-year Wind average of 29x), corresponding to a target price of 26.31 yuan; we gave the company a 24-year 23x H-share PE valuation (H-share comparable company's 24-year consistent expected average wind estimate 23x), corresponding to a target price of HK$22.99, maintaining a “buy” rating.
1Q24 sales and R&D expenses increased year-on-year, and gross margin improved the company's 1Q24 sales/management/R&D/finance expenses ratio by 28.46%/3.39%/15.77%/-0.49%, +2.09/+0.53/+2.27/+0.00pct year-on-year. The 1Q24 gross profit margin was 73.84%, +5.47pct year on year, reflecting the results of improving efficiency and reducing costs.
External environmental factors affect performance, and we are optimistic about the 24-year performance recovery
Factors external to the industry affect the company's performance in the short term. We are optimistic about the performance for the full year of 24:1) Joint: Considering that the impact of collection on factory prices has been digested, and additional rules for joint collection renewal have been added, and emphasis is placed on companies that have performed well in the first round of procurement in terms of bidding to benefit domestic leaders that won the first round of bids and have good supply capacity, we expect the company to resume 18% year-on-year growth in 2012; 2) Sports Medicine: National procurement is expected to land in 24, and the company is expected to use the gap in collection volume to enter hospitals to quickly release sales volume. We expect 24 years Due to the reduction in collection prices, sports medicine revenue was -10% year-on-year. We are optimistic that subsequent prices will affect rapid revenue growth after digestion; 3) Spine: The impact of collection, return and exchange will gradually be digested. We expect revenue from spinal products to be 110 million yuan in 24 years.
A fully developed domestic orthopedic leader, maintaining a “buy” rating
We expect net profit for 24-26 to be 3.48/4.44/566 million yuan, compared to +25.3%/+27.4%/+27.6%. The current stock price of A shares corresponds to PE 25x/20x/15x in 24-26, and the current stock price of H shares corresponds to PE 12x/9x/7x in 24-26 years, and adjust the target price to 26.31 yuan for A shares/HK$22.99 for H shares (previously HK$22.51 for A shares/HK$19.86 for H shares), maintaining the “buy” rating.
Risk warning: Sales of new products fell short of expectations; sales of collected products fell short of expectations.