1Q24 net profit exceeded our expectations
The company announced 1Q24 results: revenue of 358 million yuan, +25% year over year; return to mother/deducted non-net profit of 1.84 billion yuan/178 million yuan, respectively, +48%/49% YoY. Revenue was in line with our expectations, and profits exceeded our expectations due to significant declines in various expense rates.
Development trends
Revenue for the first quarter was in line with expectations, and expenses declined markedly. 1Q24 achieved revenue of 358 million yuan, +25% year over year. The gross profit margin was 76.5%, up 1.3 ppt month-on-month and 0.8 ppt year-on-year. Sales/management/R&D expense ratios decreased by 1.4/0.7/6.2 ppt, respectively. Among them, R&D cost savings were the most obvious, with 1Q24 about 23 million yuan (36 million yuan in the same period last year). Supported by the above factors, the company's profit for the first quarter exceeded our expectations, and the deducted non-net interest rate reached 49.7%. The core products Castor thoracic branch stents/Minos abdominal stents/PTX knee brackets/Fontus branch intraoperative stents/Talos thoracic stents reached 1,000/850/950/200/200, respectively.
Innovation and internationalization continue to advance. According to the company's public account 1, in terms of innovation pipelines, Cratos completed the submission of registration data to the China Drug Administration and completed the first clinical trial enrollment before overseas marketing in Switzerland. Vflower venous stents, L-REBOA blocking balloons, and Vewatch venous filters have been submitted for registration with the FDA. The Fishhawk mechanical thrombectomy catheter has completed pre-marketing clinical trials. The lower knee ball, Aegis second-generation abdominal stent, and HepaFlow laminated stent are equal to pre-marketing clinical trials. Hector thoracic multi-branch laminating stents are in the domestic single-center clinical follow-up phase, and the first overseas clinical enrollment was completed in Switzerland. In terms of internationalization, 1Q24 obtained 4 new overseas product registration certificates and developed new business in 3 countries; obtained a total of 43 product registration certificates, and entered 34 countries in Europe, Latin America, Southeast Asia, etc.
Profit forecasting and valuation
We keep our profit forecast unchanged, and the current stock price corresponds to the 2024/25 price-earnings ratio 24/22 times. We maintain our outperforming industry rating and target price of 236 yuan, which corresponds to a price-earnings ratio of 30/28 times in 2024/25, and has 27% room to rise from the current stock price.
risks
The price reduction in collection exceeded expectations, the promotion of new products fell short of expectations, research and development failed, and internationalization fell short of expectations.