Description of the event
In 2023, the company's revenue was 34.93 billion yuan, up 15% year on year; net profit to mother was 11.58 billion yuan, up 20.6% year on year; net profit after deducting non-return to mother was 11.43 billion yuan, up 20% year on year. In the first quarter of 2024, the company's revenue was 9.37 billion yuan, up 12.1% year on year; net profit to mother was 3.16 billion yuan, up 22.9% year on year; net profit after deducting non-return to mother was 3.04 billion yuan, up 20.1% year on year; and net operating cash flow was 2.86 billion yuan, up 114.8% year on year.
Incident comments
Performance has maintained high-quality growth. On the domestic side, the company's revenue in 2023 was 21.382 billion yuan, up 14.5% year on year. Among them, IVD achieved 20% growth and reagents increased by more than 25%. The slow domestic growth rate in the second half of the year was mainly due to extensive delays in domestic equipment bidding and procurement activities due to medical industry rectification actions since August 2023, which led to a slowdown in growth in the second half of the year. It is expected that domestic public hospital bidding activities will recover quarterly in 2024. On the overseas side, the company's revenue in 2023 was 13.550 billion yuan, up 15.8% year on year, with an increase of 22% in the second half of the year, mainly in developing countries, where the growth rate was more than 20% faster.
Continue to break through overseas high-end customers. Through horizontal exploration and vertical expansion, the company's international strategic customer team leverages the rich product portfolio advantages of the three major business fields and the digital intelligence capabilities of the “Sanrui” ecological solution to establish a global, regional, and national window hospital. In North America, the company has covered more than 80% of IDN medical consortia and has signed agreements with two major medical consortia in North America. It has made continuous breakthroughs in European, Asian, and Latin American government collection projects, and established global window hospital benchmarks such as Saltpeter Bank Charity Hospital in France and Gregory Maranon University Hospital in Spain.
Outreach mergers and acquisitions enhance competitiveness. In January 2024, the company used its own funds to acquire control of Huitai Healthcare, a company listed on the Science and Technology Innovation Board, through the “agreement transfer+voting rights” method, quickly laid out a segmented circuit in the cardiovascular field, and further broadened the product matrix. In the future, on the one hand, the company will accelerate the clinical application of Huitai's 3D electrophysiology system in the domestic field of atrial fibrillation, and on the other hand, use the advantages of global marketing resource coverage to enhance the competitiveness of Huitai Medical's products in the global market.
Deeply cultivate the construction of an intelligent medical ecosystem of “equipment+IT+AI”. The company's “Sanrui” system continues to be upgraded: 1) The “Ruizhi Link” ecosystem has launched multi-scenario solutions including full hospital, severe illness, perioperative care, emergency care, cardiology, and general care. By the end of 2023, the “Ruizhi Link” ecosystem had a total of nearly 700 installed hospitals in China, with more than 400 new ones added; “Ruizhi M-Connect” had a total of more than 400 signed projects in the international market.
2) The company actively promoted the “Mindray Smart Test” laboratory solution. By the end of 2023, it had installed more than 210 hospitals nationwide, 80% of which were tertiary hospitals, including 65 new installations. 3) The company accelerated the promotion of the “Ruiying Cloud ++” video cloud service platform. By the end of 2023, it had covered 31 provinces, cities and autonomous regions across the country, achieving a cumulative total of more than 10,000 installed units, including nearly 5,500 new installations.
Optimistic about the company's future development and maintaining a “buy” rating. We expect the company's 2024-2026 net profit to be 13.918 billion yuan (+20.2%), 16.786 billion yuan (+20.6%), and 20.063 billion yuan (+20.7%), respectively. The current stock price corresponding to 2023-2025 PE is 26, 22, and 18 times, respectively, maintaining a “buy” rating.
Risk warning
1. Price reduction risk;
2. Risk of exchange rate fluctuations.