The full-year 2023 results were under short-term pressure, and gross margin declined. For the full year of 2023, the company achieved revenue of 975 million yuan (-33.61%), net profit attributable to mother of 109 million yuan (-66.53%), and net profit of 108 million yuan (-66.59%) after deducting non-return to mother. Among them, single-quarter revenue for the fourth quarter was RMB 262 million (-9.21%), net profit attributable to mother for the single quarter was RMB 121 million (+18.67%), and net profit after deducting non-return to mother for the single quarter was RMB 0.26 million (+61.63%). The gross profit margin for the whole year was 32.65% (-6.85pp), and the net profit margin on sales was 11.19% (-11.01pp). The apparent performance in 2023 declined markedly due to factors such as inventory removal, a high base of products benefiting from the pandemic in the same period in 2022, and increased discounts for newly built plants.
There were significant month-on-month and year-over-year improvements in the first quarter of 2024. In the first quarter of 2024, the company achieved revenue of 272 million yuan (+20.22% YoY, +3.63%), net profit attributable to mother of 45 million yuan (+56.02%% YoY, +116.08% month-on-month), and realized net profit of 43 million yuan (+85.73% YoY, +67.73% YoY), which showed significant improvements over the same period last year.
Overseas revenue is growing at an impressive rate, and the pace of internationalization is accelerating. In January 2023, the company increased the capital of Gd Medical, a wholly-owned subsidiary in the US, with its own capital of 45 million US dollars, absorbed and merged the original TPI business and asset companies through business mergers, and made full use of the opportunity to acquire the original TPI business and assets to exert synergy effects, share with the channels and customers of the merger and acquisition targets, and enhance the company's competitive advantage in overseas regions. For the full year of 2023, the company's foreign business revenue was 531 million yuan, up 21.56% year on year; domestic business revenue was 425 million yuan, down 58.46% year on year.
The management system is perfect, and the product quality is stable and reliable. The company has always adhered to the principles of high quality, high efficiency, common development and shared prosperity, established a complete quality management system in strict accordance with domestic and foreign regulations and standards, and implemented strict quality control in all aspects of R&D, production, inspection and sales. By the end of 2023, the company had passed the ISO13485 quality management system certification of the German TUV certification company, obtained 29 domestic medical device Class II or Class III registrations or Class I filings, and some products had passed the US FDA 510 (k) product license and EU CE certification. The perfect quality management system and system ensure the stable and reliable quality of the company's products during mass production, providing a solid guarantee for the company's products to enter more international markets.
Risk warning: raw material prices fluctuate; overseas expansion falls short of expectations; increased competition; geopolitical risks.
Investment advice: Overseas revenue is growing at an impressive rate, the pace of internationalization is accelerating, and maintaining “increasing holdings”. The estimated net profit for 2024-2026 is 2.50/3.03/352 million yuan, a year-on-year growth rate of 129.3%/21.1%/16.0%. The current stock price corresponds to PE = 21.7/17.9/15.4x. As the company's international layout continues to mature and its ability to expand overseas markets continues to increase, the company is expected to resume a steady growth trend.