Revenue in 2023 showed a positive growth trend, and net profit to mother increased 31% year over year. In 2023, the company achieved revenue of 1,146 million yuan (+16.55%), net profit attributable to mother of 329 million yuan (+30.65%), and net profit of non-return to mother of 313 million yuan (+34.39%). Among them, the fourth quarter achieved revenue of 337 million yuan (+8.71%) and net profit of 124 million yuan (+25.66%). The company's two main businesses, treatment and rehabilitation and in vitro diagnosis, continued to enrich and improve the product system. At the same time, the company's marketing capabilities were further strengthened, which led to good revenue growth. In the first quarter of 2024, we achieved revenue of 306 million yuan (+10.06%) and net profit to mother of 107 million yuan (+21.69%), maintaining a steady growth trend.
The treatment and rehabilitation business is growing rapidly, further deepening the international business layout. By product, in vitro diagnostic products had revenue of 829 million yuan (+10.73%) in 2023, of which test equipment revenue was 310 million yuan (+15.68%) and test reagents were 518 million yuan (+7.96%). Clinical applications continued to increase. In particular, the two major series of products, luminescence and saccharification, drove related performance growth. In 2023, treatment and rehabilitation products had revenue of 304 million yuan (+33.79%), of which medical products had revenue of 288 million yuan (+32.30%) and household products had revenue of 16 million yuan (+66.51%). Core clinical medical products such as air waves and sputum removal machines continued to grow well. At the same time, the dermatology series was well received by the industry to drive performance growth in the new business segment. By region, the company strengthened domestic and international marketing system capacity building. In 2023, domestic business revenue was 809 million yuan (+23.82%), and international business revenue was 324 million yuan (+0.47%). If products related to the epidemic were excluded, overseas business continued to grow well.
Gross profit margin continued to rise, and operating cash flow remained healthy and high quality. With the continuous optimization of the company's product structure, the share of sales of high-margin products increased, and at the same time, the scale effect gradually became apparent, and gross margin increased to 65.81% (+7.29pp) in 2023. The sales expense ratio is 16.99% (+1.95pp), mainly the increase in sales staff salaries, travel expenses, and the corresponding increase in promotion expenses for e-commerce platforms starting operation in 2023; R&D expenses ratio 14.82% (-2.55pp), management expenses ratio 5.32% (+0.66pp), financial expenses ratio -2.76% (+0.87pp); and further increase to 28.68% (+3.10pp). Net operating cash flow in 2023 was 304 million (+11.82%), and the ratio of net operating cash flow to mother's net profit reached 93%, maintaining a healthy and high quality.
Investment advice: Considering the impact of industry policies and the macro environment, the 2024-25 profit forecast was lowered, and the 2026 profit forecast was added. The estimated net profit for 2024-26 is 4.20/5.24/640 million (originally 430/559 million in 2024-25), an increase of 27.7%/24.9%/22.0% year-on-year; the PE corresponding to the current stock price is 20/16/13 times, respectively. The company spans two high-quality tracks of in vitro diagnosis, treatment and rehabilitation, and has a high-barrier electrochemiluminescence technology platform. It has forward-looking layout in the fields of dermatology, aesthetics and consumer health. It has broad growth prospects and maintains a “buy” rating.
Risk warning: policy risk, sales promotion falling short of expectations, R&D progress falling short of expectations, exchange rate risk.