Incident: The company released the 2023 report and the first quarter report of 2024, with revenue of 7.97 billion yuan (+12.3%) in 2023, and realized net profit of 2.40 billion yuan (+50.2%) to mother. 2024Q1's revenue was 2.23 billion yuan (-17.4%), and net profit attributable to mother was 660 million yuan (-7.6%). 24Q1 was slightly pressured by the high base for the same period.
Each core business has its own highlights. By business, 1) Respiratory treatment business: Revenue of 3.37 billion yuan (+50.6%) in 2023. Among them, the three core products of ventilators, oxygen concentrators, and atomization maintained rapid growth, with year-on-year growth rates of about +60%/+30%/+60% respectively. The new products launched in 2023, the third-generation ventilator BREATCAREIII and the high-flow respiratory petrochemical therapy device (CE MDR certified) will help the respiratory business continue to grow. 2) Diabetes care business: Revenue of 730 million yuan (+37.1%) in 2023. The CT3 registration certificate for a new generation of 14-day calibration-free CGM products has been implemented, and high-speed deployment is expected to begin in 2024. 3) Household electronics business: Revenue of 1.67 billion yuan (+10.1%) in 2023, of which electronic blood pressure monitor products grew by more than 20% year on year. 4) Infection prevention and control business: Revenue of 760 million yuan (-36.2%) in 2023, mainly under passive pressure due to the high base for the same period. 5) First aid business: Revenue of 160 million yuan (+8.0%) in 2023. After the self-developed AED product M600 was certified, the global business continued to expand. 6) Rehabilitation and clinical equipment business: Revenue of 1.22 billion yuan (-12.8%) in 2023, but products such as wheelchairs and acupuncture needles maintained a good growth trend.
Continuous optimization on the cost side. In 2023, the company's sales/management/R&D/finance expense rates were 13.8%/5.2%/6.3%/-2.0%, with year-on-year changes of -0.7pp/ -0.8pp/ -0.7pp/ -0.6pp. The overall four fees showed a steady and declining trend. The company's product structure continued to be optimized, combined with effective cost reduction and efficiency management methods and an increasingly improved supply chain system to achieve a gross sales margin of 51.5% (+3.4pp) in 2023, and a net sales margin of 29.8% (+7.7pp).
Adhere to the strategic direction of “innovation and reshaping medical devices” and continue to expand the three core tracks. The company's core business focuses on the three major sectors of breathing, POCT, and sensory control. These three segments have the characteristics of high gross profit, high growth, and large space, and are expected to become the core driving force in the future, while adding incubation services (first aid, ophthalmology, rehabilitation) and cornerstone businesses (blood pressure monitoring, temperature monitoring, traditional Chinese medicine equipment, surgical instruments) and promotion of internationalization.
Profit forecast: The estimated revenue for 2024-2026 is 90/103/119 billion yuan, net profit to mother is 23/26/3 billion yuan, and the corresponding PE valuation is 16/14/12 times.
Risk warning: Risk of R&D progress falling short of expectations, risk of product promotion falling short of expectations, risk of overseas market development.