Incident: The company released its 2023 annual report, achieved revenue of 340 million yuan (+78%), realized net profit of 39.63 million yuan (year-on-year loss of 120 million yuan), and realized deduction of 49.71 million yuan. The first quarter of 2024 achieved revenue of 91.06 million yuan (+24.5%), net profit of 2.5 million yuan, and net profit of non-return to mother of 17.79 million yuan. The performance was in line with expectations.

The results have been growing steadily for 23 years, and the expense ratio has declined significantly. 1) On a quarterly basis, revenue for the 23Q1/Q2/Q3/Q4 single quarter was 0.7/0.9/0.8/100 million yuan (+23.8%/+72.1%/+49.8%/+266.3%), respectively. Revenue growth accelerated in the fourth quarter, and the performance was steady. 2) In terms of profitability, the gross margin in 2023 was 58.9%, due to an increase in the share of coronary vessels in the business structure. The sales expense ratio was 18.4%, management expenses were 27.6%, R&D expenses were 33.2%, and financial expenses were 0.7%. The cost ratio decreased significantly.

Neurointerventions are entering the harvest period one after another, and many blockbuster products have opened up the growth ceiling. The company's neurointerventional product research projects cover ischemia, hemorrhage and pathways in the field of neurological intervention. In the future, 2 major products will help the company open up the growth ceiling one after another. 1) Intracranial self-inflating drug stents: expected to be launched in 2024Q4, mainly used for intracranial atherosclerotic stenosis surgery; 2) Dense mesh stents: Using a novel alloy material, they can be fully displayed under X-rays. It is expected that they will obtain a registration certificate in 2025/1, and commercialization can be expected in the future. The two products are expected to be released over 25 years. At the same time, since various neurological intervention products (such as embolization stents, hemorrhagic products, and pathway products) are being collected one after another, it is expected that there will be pressure to reduce the collection price of neurological intervention products in the future. However, since the competitive pattern of product lines in some sub-fields is still good and highly innovative, future declines in factory prices and gross margins are manageable.

Considering the current growth cycle of the neurological intervention industry and the steady increase in surgical penetration rate, it is expected that the industry will continue to expand in the future.

Promote overseas sales and accelerate the international layout. The internationalization strategy is one of the company's important measures to deal with the normalization of domestic intervention in the collection of consumables. The company continues to lay out overseas organizational structures, talent development, market expansion, product registration, clinical trials, and overseas cooperation. Currently, the company has developed overseas business in mature markets such as Europe and America, as well as emerging markets such as Southeast Asia and Africa. Various coronary intervention products have obtained registration certificates in Europe, the United States, South Korea, Singapore and other countries, and are gradually cooperating with local dealers.

Profit forecast and investment advice: The compound revenue growth rate of the company is expected to reach 51.7% in 2024-2026.

Considering the clear trend in the amount of coronary stents released after collection, and that the company's neurological intervention products are entering the harvest period, the company's performance is expected to usher in a recovery period. Maintain a “buy” rating.

Risk warning: risk of failure or delay in registration of new products, risk of supply of important raw materials, risk of price reduction of collected products, risk of overseas market operation and exchange rate risk.