The company achieved revenue of 471 million yuan in 2023, a year-on-year decrease of 1.31%, a year-on-year net profit of 146 million yuan, a year-on-year decrease of 20.19%, after deducting non-net profit of 136 million yuan, a decrease of 19.20% year-on-year. In the fourth quarter of 2023, the company achieved revenue of 94 million yuan, a year-on-year decrease of 31.20%, a year-on-year net profit of 0.28 million yuan, a year-on-year decrease of 35.54%, after deducting non-net profit of 0.25 million yuan, a year-on-year decrease of 35.62%. The slight decline in the company's revenue in '23 was mainly affected by US customers' iterations and delays in the new system, and short-term demand for overseas delivery of the company's endoscopic products declined. In the first quarter of 2024, the company achieved revenue of 118 million yuan, a year-on-year decrease of 20.74%, a year-on-year net profit of 38 million yuan, a year-on-year decrease of 20.68%, after deducting non-net profit of 0.36 million yuan, a year-on-year decrease of 21.40%. The decline in revenue in the first quarter of '24 was mainly due to the fact that major US customers continued to concentrate on preparing for the release of the new system in the first quarter of 2023. The high base during the same period affected the performance of the current period.

New systems for US customers are gradually being rolled out, and the company's shipments are expected to pick up month-on-month. The company's next-generation endoscope system for US customers was launched in September 2023, and the market response of the product was good after launch. Since the mass launch of the 1788 system, the endoscopy business of American customers has grown rapidly. In 2023, the endoscopy business sales exceeded 3 billion US dollars, an increase of 11-12%. The light source module, fluorescence laparoscope, and camera-compatible lens in the 1788 system are all designed and produced by the company. The specific products involved have nearly 20 specifications. The company is the only manufacturer of these products, and there is no secondary supplier. Along with the increase in sales of the 1788 system, sales of the light source modules and fluorescence laparoscopes used in the company are expected to gradually increase. Meanwhile, the new 4mm hysteroscope developed by the company for the US market has completed product finalization and mass production preparations have begun. It is expected to be officially launched on the market in June 2024. The company is also developing 2.9 mm cystoscopes, 3 mm pediatric laparoscopes, and open surgical exoscopes for American customers. The company's cooperation with American customers extends from the original laparoscopy to the fields of urology, gynecology, and open surgery.

The domestic private brand layout continues to expand, and the volume of independent machines can be expected. The company has completed product registration for arthroscopy, 3D laparoscopy, and thoracic endoscopy in the domestic market, and has begun to market. The company's full range of laparoscopes for the domestic market, including white light, fluorescence, defogging, 3D fluorescence, standard length, extended, and ultra-fine laparoscopes, is being registered one after another. It is expected that registration will be completed in 2024. At that time, the company's laparoscopy will fully cover the needs of abdominal surgery. The company has completed product development and begun registration testing for endoscopic products such as hysteroscopy, cystoscopy, and sinus scopes developed for urology, gynecology, and head and neck surgery. It is expected that the products will be registered in mid-2024. The company's second-generation endoscopic camera system began receiving evidence one after another in November 2023, and has now been launched on the market and sales have been formed.

Profit forecasting and investment advice. We estimate that the company's net profit for 2024-2026 will be 190 million yuan, 255 million yuan, and 320 million yuan respectively, with growth rates of 30.4%, 33.7%, and 25.8%, respectively, and corresponding EPS of 1.56 yuan, 2.09 yuan, and 2.63 yuan. Referring to comparable companies, we gave the company 35-40XPE in 2024, corresponding to a reasonable value range of 54.68-62.50 yuan, maintaining a “superior to the market” rating.