Summary: In 2023, the company achieved operating income of 34.93 billion yuan (+15.04%, same ratio, same below), realized net profit attributable to mother of 11.58 billion yuan (+20.6%), and realized net profit of 11.43 billion yuan (+20.04%) after deduction of non-return to mother. In the first quarter of 2024, the company achieved operating income of 9.37 billion yuan (+12.06%), achieved net profit attributable to mother of 3.16 billion yuan (+22.90%), and achieved net profit of 3.04 billion yuan (+20.08%) after deduction. The performance was in line with our expectations.
Overseas markets accelerated sequentially in 2023, and developing country markets performed well. By region, the domestic market achieved revenue of 21.382 billion (+14.5%). Since March 23, domestic routine diagnosis and treatment activities have recovered rapidly, driving domestic IVD to achieve rapid growth of 20% throughout the year, with reagent revenue increasing by more than 25%. The international market achieved revenue of 13.550 billion dollars (+15.8%), with an increase of 22% in the second half of the year. Developing countries still showed the most impressive growth rate. The annual growth rate exceeded 20%, and the North American market had a compound growth rate of 18% for two consecutive years.
The IVD business grew faster than other production lines in 2023. By product, the IVD production line achieved revenue of 12.421 billion yuan (+21.12%) in 2023. The compound growth rate of international IVD exceeded 30% for two consecutive years, broke through more than 100 third-party chain laboratories, and the domestic luminescence market ranked more than one imported brand and ranked fourth for the first time; Life Information and Support Business (PMLS) achieved revenue of 15.225 billion yuan (+13.81%), and its international PMLS grew by more than 20% in the second half of the year. The seed business minimally invasive surgery grew by more than 30% throughout the year. The market share increased to third in China; the medical imaging (MIS) production line achieved revenue of 7.034 billion yuan (+8.82%), of which high-end ultrasound models grew by more than 20%, and the ultrasound market position reached number one in the country and third in the world for the first time.
High-quality responses were handed over in the first quarter of 2024 under a high base. The domestic market grew by single digits in the first quarter due to urgent purchase orders brought about by the 23Q1 domestic ICU ward construction, but domestic IVD and MIS, which were suppressed during the same period last year, achieved high recovery growth. The international market base was low due to 23Q1 production capacity being skewed towards domestic production. At the same time, driven by the continuous acceleration of breakthroughs in the overseas high-end customer base, the international market grew by nearly 30% in the first quarter. Among them, developing countries grew by more than 30%, and all three major international production lines achieved rapid growth.
Profit forecast and investment rating: Considering the 23-year high base, we adjusted the company's 24-25 profit forecast from 140.1/17.19 billion yuan to 139.6/16.81 billion yuan. We expect the company's net profit to be 20.07 billion yuan in '26. The PE corresponding to the current market value is 26/22/18X, maintaining a “buy” rating.
Risk warning: Market competition is intensifying, and overseas market expansion falls short of expectations.