Key points of investment:
The company released its 2024 quarterly report, and revenue growth is still high under a high base.
24Q1: Revenue of 169 million yuan (+34.9%), net profit attributable to mother of 2.76 million yuan (-83.3%), deducted non-net profit of 250,000 yuan (-101.5%), achieving a gross profit margin of 76.4% (+0.23pct year over year).
23Q1 was the company's high revenue base, and market recovery after the epidemic was compounded by the impact of the AQ-300 prototype shipment launch.
Profit side fluctuations are mainly affected by restrictive stock incentive plans and increased manpower investment.
In October 23, the company launched a new round of equity incentive plans. Equity incentive fees had a big impact on 24Q1 net profit. Net profit to mother after excluding share payments was 24.56 million yuan, an increase of 24.2% over the same period last year (after excluding share payments), which is the same trend as operating income.
The cost side maintains high investment and does not reduce the upward trend.
24Q1's sales/management/R&D expenses were 6358/2776/44.48 million yuan (YoY +53%/64%/40%), and the sales/management/R&D expenses ratio was 37.6%/16.4% 26.3% (+4.5/2.9/0.9pct).
Two-wheel drive at home and abroad helps continue to increase revenue.
AQ-300 will further promote the development of European channels after obtaining overseas evidence. The WISAP model is expected to be replicated, increasing the share of overseas mid-range and high-end model sales, and driving a high increase in overseas revenue. Driven by the domestic equipment renewal program, the company's endoscopic equipment revenue is expected to maintain a high growth rate.
Profit forecasting and investment advice
According to the adjusted profit forecast based on regular reports, we expect the company's 2024-2026 revenue to be 10.1/14.4/2.03 billion yuan (previous value: 10.1/14.4/2.03 billion yuan), CAGR of 44.2%, net profit to mother of 1.16/1.80/273 million yuan (previous value was 1.19/1.82 billion yuan), CAGR of 67.8%, and current stock price corresponding to 2024-2026 PS is 7.5/5.3/3.7 times. As a leading domestic enterprise focusing on the soft mirror circuit, the company's products are innovative and clinically empowering, maintaining a “buy” rating.
Risk warning
1) R&D failure or product release falls short of expectations; 2) Medical accident risk or promotion falls short of expectations; 3) Imported brands may set up domestic factories or increase the risk of localization competition; 4) Overseas market expansion or international business risks.