Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, we achieved operating income of 7.972 billion yuan (+12.25%), net profit attributable to mother of 2,396 billion yuan (+50.21%), net non-net profit of 1,836 billion yuan (+46.79%), and operating cash flow of 2.127 billion yuan (-7.72%). 2023Q4 achieved operating income of 1,309 million yuan (-34.08%), net profit attributable to mother of 205 million yuan (-55.36%), and deducted non-net profit of 165 million yuan (-43.19%). 2024Q1 achieved operating income of 2,231 million yuan (-17.44%), net profit attributable to mother of 659 million yuan (-7.58%), deducted non-net profit of 551 million yuan (-21.69%), and operating cash flow of 676 million yuan (-17.14%).
Core business operations are steady, and performance fluctuates due to base changes. By business, 2023: ① Respiratory treatment: achieved revenue of 3.371 billion yuan (+50.55%), mainly driven by increased market demand. Among them, the business scale of oxygen concentrator products increased by nearly 60% year on year, ventilator products grew by more than 30%, and atomization products grew by more than 60%, highlighting that the company has the ability to respond quickly in the face of market changes; ② Diabetes Care: Achieving revenue of 726 million yuan (+37.12%), mainly due to continuous deepening expansion within and outside the hospital, the market position continued to improve. The company's 14-day calibration free of CGM product registration The certification has been successfully implemented and successfully introduced to the market; ③ Infection control: achieved revenue of 756 million yuan (-36.15%), mainly affected by the high base due to special market demand during the same period; ④ Household electronic testing and in vitro diagnosis: achieved revenue of 1,674 billion yuan (+10.05%), of which electronic blood pressure monitor products increased by more than 20%; ⑤ First aid: achieved revenue of 163 million yuan (+8.04%). Self-developed AED product M600 continued to expand its domestic and overseas business after being certified; ⑥ Rehabilitation and clinical devices: achieved revenue of $1,228 million ( -12.82%), mainly due to a decrease in sales volume in the second half of the year, and the growth trend of the main products such as wheelchairs and acupuncture acupuncture was good. There has been a decline in 2024Q1's revenue and profit side, which is mainly expected to be affected by the higher respiratory care sector base in 2023.
Product structure optimization drives increased gross profit, and profitability is expected to continue to increase. 1) 2023: The company's overall gross margin increased by 3.36pct to 51.49%. On the one hand, it is expected that the increase in sales scale will dilute production costs to a certain extent. The gross profit margin of the company's respiratory treatment business in 2023 is 56.12% (+2.75pct), the gross profit margin of the household electronic testing and in vitro diagnosis business is 52.54% (+6.32pct), and the gross profit margin of the diabetes care business is 62.68% (+1.83pct). In 2023, the company's net interest rate was +3.64pct to 29.81% (the highest level in history), sales expense ratio 13.78% (-0.75pct), management expense ratio 5.16% (-0.76pct); 2) 2024Q1: The company's overall gross profit margin (49.94%, -2.71pct) declined slightly, but the net interest rate remained at a high level of 29.63% (+3.46pct).
R&D innovation strengthens product strength and brand power, and looks forward to overseas business driving future growth. In 2023, the company spent 504 million yuan (+1.6%) on R&D, accounting for 6.33% (-0.66pct) of revenue. 2024Q1 spent 124 million yuan on R&D (-7.98%), accounting for 5.58% (+0.58pct) of revenue. In recent years, the company's continuous glucose testing system CT3 series products, third-generation sleep ventilators, high-flow oxygen concentrators, semi-automated external defibrillators and other products have all achieved important technological breakthroughs, and registration work has gradually been implemented in overseas countries such as the European Union, the United States, Thailand, and Brazil. By strengthening overseas territorial team building, the company's export sales channels continue to expand, and the overseas regional multi-level classification marketing system is continuously improved. In 2023, the company achieved revenue of 727 million yuan (+2.45%), accounting for 9.13% (-0.87pct). Although the volume and share of overseas business is still small, as core products such as ventilators and CGM expand further in overseas markets, it is expected that the future will contribute more performance growth to the company.
Investment advice: The company is a leading household medical device, focusing on the three core tracks of respiratory and oxygen production, blood sugar, POCT, and disinfection and sensory control. The product structure is constantly being improved, and the advantages of domestic and foreign brands continue to increase. We expect the company's net profit to be 22.74/26.29/3,023 billion yuan in 2024-2026, -5.07%, +15.58%, and +15.00%, EPS of 2.27/2.62/3.02 yuan respectively. The current stock price corresponding to 2024-2026 PE is 16/14/12 times, maintaining the “recommended” rating
Risk warning: Risk that R&D and registration progress falls short of expectations, risk of new product promotion falling short of expectations, risk of overseas market expansion falling short of expectations.