Core views
The company's 2024Q1 revenue increased 12.72% year on year, and net profit to mother increased 41.36% year on year. Revenue growth was in line with expectations, and profit growth exceeded expectations. Looking ahead to the whole year, the company's visualization and other new products will gradually be introduced into mainstream markets in the US and Europe. As the company continues to develop new overseas sales channels, the overseas business growth trend is expected to continue to improve; due to policies such as collection and DRG/DIP, there is some uncertainty about domestic market growth, but the company actively promotes sales model innovation and continues to reduce costs and increase efficiency, and the domestic business is expected to achieve steady growth throughout the year.
occurrences
The company released the 2023 Annual Report and 2024 Quarterly Report
In 2023, the company achieved revenue of 2,411 billion yuan, an increase of 21.78%; net profit to mother was 486 million yuan, an increase of 47.01% year on year; net profit after deducting non-return to mother was 463 million yuan, up 54.67% year on year; and EPS was 2.59 yuan/share. The 2023 profit distribution plan is: The company plans to distribute a cash dividend of 10 yuan (tax included) to all shareholders for every 10 shares, no bonus shares, and no capital increase from the capital reserve fund.
The company achieved revenue of 620 million yuan in 2024Q1, up 12.72% year on year; net profit to mother was 143 million yuan, up 41.36% year on year; net profit after deducting non-return to mother was 141 million yuan, up 42.21% year on year; and EPS was 0.76 yuan/share.
Brief review
The 2023 results are in line with expectations, with significant results in cost reduction and efficiency
In 2023, the company's revenue, net profit attributable to mother, and net profit excluding non-return to mother were 2,411, 4.86, and 463 million yuan respectively, up 21.78%, 47.01%, and 54.67% year-on-year respectively. The company accelerated channel network expansion, expanded its competitive advantage in the global market, and the annual performance growth was in line with expectations.
By product, in 2023, the company's revenue from hemostasis and closure products was 921 million yuan, up 27.07% year on year; revenue from biopsy products was 247 million yuan, down 1.37% year on year. The biopsy product market competition was fierce, and the domestic market may also be affected by dealer inventory; revenue from expansion products was 212 million yuan, up 13.56% year on year; revenue from ERCP products was 173 million yuan, up 57.60% year on year; revenue from EMR/ESD products was 351 million yuan, up 37.94% year on year; Revenue from EUS/EBUS products was 43 million yuan, up 82.38% year on year; revenue from microwave ablation needles was 174 million yuan, up 41.06% year on year; tumor ablation equipment was 0.12 billion yuan, up 107.70% year on year; revenue from visualization products was 97 million yuan, down 48.78% year on year. The sales base for visualization products was high in 2022, and the product admission process in the second half of 2023 was affected by factors such as increased medical compliance requirements.
According to the sales model, the company's distribution revenue was 1,857 billion yuan, accounting for 77.54% of main revenue; direct sales revenue was 457 million yuan, accounting for 19.09% of main revenue, mainly due to increased sales revenue in overseas markets in America and Europe; OEM sales revenue was 81 million yuan, accounting for 3.37% of main revenue. Due to strategic adjustments, the share of OEM sales business declined further.
By region, the company's domestic market revenue in 2023 was 1,353 billion yuan, up 18.21% year on year; overseas market revenue was 1,042 billion yuan, up 25.80% year on year. Among them, the American market introduced strategic consulting, formulated and implemented market reforms, updated the marketing team and refined the coverage area, and achieved revenue of 471 million yuan, an increase of 22.58% over the previous year; the EMEA region further improved marketing network construction, increased support for Anglo-French subsidiaries, acquired two Portuguese and Swiss channel companies, and expanded the company's direct sales channels in Europe. The EMEA region achieved revenue of 411 million yuan in 2023, an increase of 30.87% over the previous year.
24Q1 profit growth exceeded expectations, continued cost reduction and efficiency
The company achieved revenue of 620 million yuan in 2024Q1, up 12.72% year on year; net profit to mother was 143 million yuan, up 41.36% year on year; net profit after deducting non-return to mother was 141 million yuan, up 42.21% year on year. The company's 2024Q1 revenue growth was in line with expectations, and the profit side growth rate exceeded the revenue side. We expect it is mainly due to good business growth trends in overseas markets, significant profit improvements in major markets such as the US and Europe, and an increase in the share of high-margin products; in addition, the company continued to reduce costs and increase efficiency, and the overall cost ratio decreased during the period.
Looking ahead to the whole year, the company's overall performance is expected to achieve steady growth, driven by overseas business. New products such as visualization are gradually introduced into mainstream markets in the US and Europe. As the company continues to develop new overseas sales channels, the overseas business growth trend is expected to continue to improve; due to policies such as collection and DRG/DIP, there is some uncertainty about domestic market growth, but the company actively promotes sales model innovation and continues to reduce costs and increase efficiency. Domestic business is expected to achieve steady growth throughout the year.
Financial data is generally normal, and cost control is good
In 2023, the company's comprehensive gross margin was 64.50%, up 3.55 percentage points year on year. It is expected to be due to factors such as increased revenue share of products such as hemostasis with high gross margin and the company's overall cost reduction and efficiency; the sales expense ratio was 23.74%, up 1.86 percentage points year on year, mainly due to increased sales staff remuneration, travel expenses and marketing expenses; management expenses were 13.63%, a decrease of 1.98 percentage points year on year. Management expenses increased 6.36% year on year, and management remuneration, travel expenses and quality certification fees increased; R&D The cost rate was 6.25%, a decrease of 2.1 percentage points over the previous year, mainly due to the reduction in the company's R&D and trial production consumption. The rest of the financial indicators are generally normal.
2024Q1, the company's comprehensive gross margin was 68.31%, up 5.44 percentage points year on year, mainly due to product restructuring and increase in gross margin of overseas business; sales expenses ratio is 21.68%, up 1.47 percentage points year on year, which is expected mainly due to increased sales staff remuneration, travel expenses and marketing expenses; management expenses ratio is 13.30%, a decrease of 0.56 percentage points year on year; R&D expense ratio is 4.99%, a decrease of 1.45 percentage points year on year. The company actively optimizes R&D investment, focuses on key projects, and R&D sample materials. There has been a decrease. The rest of the financial indicators are generally normal.
Profit forecasting and valuation
In the short term, in the domestic market, the company's visualization products such as disposable cholangioscopy and disposable bronchoscopy are expected to become the company's second growth curve, contributing new profit growth points; in the international market, the company continues to expand sales channels and actively introduce new products in major markets, and the share of overseas business is expected to further increase. In the long run, with the further enrichment of the company's product pipeline and continued market development, it is expected to further open up space for global growth.
We forecast that in 2024-2026, the company's revenue will be 29.09 billion yuan, 34.78 billion yuan, and 4.117 billion yuan, respectively, up 20.64%, 19.55%, and 18.38% year on year; net profit to mother will be 589, 7.06 million yuan, and 838 million yuan, respectively, up 21.29%, 19.77% and 18.72% year on year, respectively. Based on the closing price of May 6 (76.00 yuan/share), the 2024-2026 PE was 24, 20, and 17 times, respectively, maintaining a “buy” rating.
Risk warning
Market competition risk: In the traditional endoscopic diagnosis and treatment consumables industry, more and more products are registered and approved by domestic companies, which will inevitably increase industry competition; in terms of visual product layout, manufacturers of traditional endoscopic consumables and equipment manufacturers all have layouts, and they will also face the risk of increased competition in the future; risk of industry policy changes: the Health Insurance Administration continues its procurement policy for medical consumables. Currently, the “3+N” alliance led by Hebei has already collected endoscopic hemostasis clips. If the scope of collection regions or products expands in the future, the impact on the company's business progress is uncertain; It fell short of expectations ：
The company's transformation and layout visualization products have both synergy and differences with the target departments. There is a risk that marketing will go smoothly; there is a risk of exchange fluctuations: Some of the company's business is foreign exchange settlement, and there is a risk that it will be affected by exchange rate fluctuations.