Incident: The company released its first quarterly report of 2024, with operating income of 455 million yuan, up 30.20% year on year; net profit of 140 million yuan, up 36.48% year on year; net profit after deduction of 137 million yuan, up 51.59% year on year, mainly due to the increase in the company's sales scale, increase in profit due to cost reduction and control, and reduction in non-recurring profit and loss; net cash flow from operating activities was 115 million yuan, a decrease of 1.51% year on year.

Comment:

Electrophysiological products are growing steadily, and collection accelerates product release. In 2023, domestic electrophysiology products were added to more than 300 hospitals, covering more than 1100 hospitals. At the same time, the domestic electrophysiology business was upgraded from traditional two-dimensional surgery to three-dimensional surgery as scheduled, and a good 3D product market brand was established. In 2023, the company completed more than 10,000 3D electrophysiological surgeries in more than 800 hospitals, and the number of surgeries increased by more than 200% compared to 2022. Currently, the company's adjustable 10-pole coronary sinus catheter maintains a leading share in this category market segment, and the adjustable curved sheath tube has completed the admission of more than 200 centers through volume procurement projects. In the 2023 volume procurement project execution cycle, the company resolutely implemented the winning bid results to ensure the stability and timeliness of supply on the premise of ensuring that product quality meets customer requirements.

Brand capabilities continue to improve, and international business has grown significantly. The overall international business of the company showed a good growth trend in 2023, with a year-on-year increase of 72.62%. Among them, the Middle East, Africa and the CIS region grew by more than 100% year on year, while other regions achieved steady growth. From a product line perspective, PCI's own brand and EP's own brand are the driving source of international business growth; the company focuses on international clinical academic exchanges and expert experience sharing activities on the clinical application of products around coronary interventional CTO surgery, complex PCI surgery, electrophysiological surgery, and peripheral interventional surgery, which further highlights the clinical value of the company's core products, and has received widespread praise from surgeons and experts.

Profit forecast: We expect EPS to be 9.66, 12.66, and 16.71 yuan respectively in 2024-2026, and the current price is 52, 40, and 30 times PE.

Risk factors: R&D risk of innovative technology and products; business channel management risk; product quality and potential liability risk; market competition risk; exchange rate fluctuation risk.