Incident: The company released its 2023 annual report, achieving revenue of 2.41 billion yuan (+21.8%), net profit to mother of 490 million yuan (+47%), and deducted non-return to mother of 460 million yuan (+54.7%). 24Q1 achieved revenue of 620 million yuan (+12.7%), net profit attributable to mother of 140 million yuan (+41.4%), and net profit of non-return to mother of 140 million yuan (+42.2%).
The 23-year results are in line with expectations, and the 24Q1 profit side is in line with expectations. On a quarterly basis, 23Q1/Q2/Q3/Q4 revenue for a single quarter was 5.5/6/670 million yuan (+24.3%/+15.4%/+42.3%), with domestic endoscopic surgeries rising, and overseas growth is optimistic; in terms of profitability, 2023 gross margin was 64.5% (+3.6pp), mainly due to 1) increase in direct sales channels; 2) Product structure changes: visualization of overseas sales volume, higher gross margin for overseas visualization; 3) Increased automation and reduced combined costs of process improvements; in terms of cost, Sales expense ratio 23.7% (+1.9pp), management expense ratio 13.6% (-2pp), R&D expense ratio 6.3% (-2.1pp).
Overseas high-speed distribution channels are being built more and more complete, and domestic and overseas two-wheel drive. By region, sales revenue from the domestic market is about 1.35 billion yuan (+18.2%), and sales revenue from the international market is about 1.04 billion yuan (+25.8%). Looking at profit centers, overall overseas revenue in the Asia-Pacific region increased 18.9% year over year; America increased 23% year over year; and EMEA increased 31% year over year. In '23, the company acquired 100% of the Portuguese channel company Endotécnica Material Cirúrgico Lda. By expanding the product line, expanding sales channels, coordinating and expanding academic promotion, actively participating in key hospital tenders, and focusing on important strategic customers, the company focuses on optimizing the efficiency of marketing activities in the German, English, French, Dutch and other distribution regions, and comprehensively improving market coverage and pricing capabilities.
The trend of consumables for endoscopic equipment is beginning to emerge, focusing on disposable endoscopy technology to consolidate the second growth curve. The company developed disposable internal medicine choledoscopes and obtained registration certificates in the US, the European Union and Japan. At the same time, disposable surgical choledoscopes have obtained domestic registration certificates and achieved mass production and shipment. Research and development of other disposable endoscopic products, such as disposable cerebral hematoma lavage systems, is progressing smoothly. In addition, the company has also developed miniature biliary biopsy forceps for disposable endoscopes. The product has been registered in Japan, and supporting consumables such as miniature stone extraction balloons have been registered domestically, providing a more complete solution for the diagnosis and treatment of related diseases. In the field of digestive endoscopy consumables, the company has successively launched innovative hemostatic products such as traction clips, three-arm clamps, closure clips, and alloy clips, and has achieved good sales results. In addition, the subsidiary Kangyou Medical has also made significant progress in new products such as microcatheters, drainage tubes, airway blocking balloons, and disposable biopsy needles. These products have been certified, and clinical trials have begun and converted production, transforming the company from a microwave technology platform to an oncology intervention platform.
Profit forecasting and investment advice. The estimated net profit for 2024-2026 is $6.2, 750 million, and $91 billion, respectively.
As a leader in innovative devices for endoscopic diagnosis and treatment, the company continues to improve its global competitiveness and maintains a “buy” rating.
Risk warning: risk of R&D failure, policy control risk, exchange rate risk, risk of new product release falling short of expectations.