Key points of investment

Incident: In 2023, the company achieved operating income of 340 million yuan (+77.99%, same ratio, same below), realized net profit to mother of 39.63 million yuan (reversal of loss of 123 million yuan), and realized net profit deducted from non-mother of 49.71 million yuan (reversal of loss of 115 million yuan). In the first quarter of 2024, the company achieved operating income of 91.06 million yuan (+24.46%), realized net profit of 2.5 million yuan, and realized net profit deducted from non-mother - 17.79 million yuan. The results were in line with our expectations.

Coronary collection was rapidly released in the first year after winning the contract renewal: the company's two coronary drug-eluting stents, HTSupreme and HT Infinity, were successfully shortlisted for the National Concentrated Coronary Stent Volume Continuous Procurement (2023-2025). The total number of intended purchases in the first year was about 50,000, and in the end, they were selected by more than 1,000 hospitals.

In 2023, the sales volume of coronary stents and the number of admissions for coronary stent products reached record highs since the company sold coronary stents. Sales of coronary stents increased 437.32% year-on-year, the average unit price decreased by 54.32%, comprehensive sales revenue increased by 145.44%, and shipments are expected to continue growing rapidly in 24 years. Furthermore, the company's HT Supreme stent has first-class data on large-scale overseas multi-center clinical trial results. It is currently the only coronary stent product in China that has entered the FDA's substantive review stage. It is expected that overseas will further open up room for growth in the future.

The innovative intracranial NOVA stent is rapidly being released, and balloons are growing steadily: the NOVA stent is the world's first drug-eluting stent dedicated to the treatment of intracranial artery stenosis, and the world's first healing-guided intracranial stent. In 2023, the company's intracranial NOVA stents relied on excellent product performance and rapid release. Sales increased 318.87% year-on-year, unit price decreased by 8.84%, and revenue increased by 281.83%. The company's balloon segment grew steadily, with overall revenue reaching 146 million yuan (+15.96%). Among them, sales of coronary balloon products increased 29.59% over the same period in 2022, and the average unit price increased slightly, leading to a 30.41% increase in coronary balloon revenue over the same period in 2022, and sales of intracranial balloon products increased 36.26% over the same period in 2022. Due to market prices, the average unit price decreased by 18.56%.

The publicity period for the intracranial self-expansion stent innovation channel has ended, and it is expected to grow into a 1 billion product after approval:

On March 15, 2024, Sano's intracranial self-inflating drug stents entered the innovation channel for review. The announcement has now ended and will soon be accepted. We believe that ICAS (intracranial atherosclerotic stenosis) has a large patient base, with 1.5 million new patients each year, but there are currently few ICAS approved products. In recent years, with improvements in experimental design, etc., the previous conclusion that stent implantation is superior to drug treatment has been gradually reversed, but naked stents cannot solve the problem of further stenosis. Sano Medical's intracranial self-inflating drug stents are more convenient and easy to operate, and have the advantage of drug coating. The small sample data revealed in October 23 is 0 (37 cases), far superior to the current market o Stand and wingspan stand. We believe that once approved, it is expected to rapidly increase surgical penetration. It is expected to grow into a product with sales of 1 billion yuan.

Profit forecast and investment rating: Considering the rapid growth of the company's coronary stent shipments, which is expected to drive overall profit due to scale effects, we raised the company's 24-25 net profit forecast from 0.01/91 billion yuan to 0.16/91 billion yuan. At the same time, net profit to mother is estimated to be 220 million yuan in '26. Currently, PE is not applicable. Furthermore, based on optimism about the prospects of self-inflating stent products, we expect the company's revenue for 24-26 to be 4.9/8.1/1.16 billion yuan. Maintain a “buy” rating.

Risk warning: the risk of price reduction in collection, product approval time is lower than expected, etc.