Core views:
Tongze Healthcare announced 2023 and 2024Q1 results. In 2023, the company achieved operating income of 2,847 million yuan, +4.70% year on year; net profit of 500 million yuan, -8.72% year on year; net profit after deduction of 481 million yuan, -8.37% year on year. In 2024Q1, the company achieved operating income of 708 million yuan, +5.03% year over year; net profit to mother was 173 million yuan, +2.51% year over year; net profit after deduction was 170 million yuan, +4.20% year over year.
There was a phased loss in 23Q4, and although profits resumed in 24Q1, they still faced heavy pressure. According to Wind, the company achieved revenue of 662 million yuan in 23Q4, +14.24% year-on-year, and net profit to mother of 11.26 million yuan. We estimate that the main reasons for the loss were: (1) the company's operations were under great pressure due to increased malicious competition at low prices, and the gross margin fell to 25.15% in a single quarter; (2) one-time expenses such as year-end bonuses increased, with management expenses of 116 million yuan per quarter; (3) changes in new leasing standards and regulations led to an increase in financial expenses, with financial expenses of 25.87 million yuan per quarter. At the same time, due to the continuing impact of the macro consumption environment, the company still faced strong pressure in 24Q1, and the performance growth rate was slow.
The consumer business is weak, and the impact of planting continues to be digested. By business, according to the company's annual report, the implant business revenue in '23 was 479 million yuan (+6.95%), and 53 million implants were planted throughout the year, increasing 47%; orthodontics 499 million yuan (-3.14%); pediatric 499 million yuan (+2.90%); restoration of 456 million yuan (+6.72%); and a total of 756 million yuan (+8.34%).
According to the company's institutional research disclosure records, 24Q1 implant revenue was 111 million yuan (+5.9%); orthodontics 120 million yuan (+2%); pediatric 120 million yuan (+2%); restoration was 106 million yuan (+4.5%); and comprehensive 197 million yuan (+7%). With the rapid release of dental implants, the implant business is gradually recovering. Although orthodontics increased slightly year-on-year in the first quarter, the upward trend is still weak.
Profit forecasting and investment advice. With the gradual release of demand for dental implants and the improvement of the macro-consumption environment, the company's performance is expected to return to a healthy growth trajectory in the future. The company's net profit for 24-26 is estimated to be 592, 7.25, and 891 million yuan, respectively. The company will be given 40X PE in 24 years, corresponding to a reasonable value of 73.84 yuan/share, maintaining a “buy” rating.
Risk warning. Medical accident risk; market competition risk; collection policy risk.