Key points of investment:
Deeply involved in household medical devices: Yuyue Medical was founded in 1998 and listed on the main board of the company in 2008 (code 002223.SZ).
The company's main business is to provide household medical devices, medical clinical products, and related medical services. In recent years, the company has successively completed acquisitions of Zhejiang Kellite (CGM), Shanghai Zhongyou (disinfection), and the German Mangis Metrax (AED), etc., and the business line continues to expand. Currently, the company is already a domestic medical device company with obvious advantages in online and offline channels and outstanding brand strength.
Household medical device circuit Changpo Houxue: According to the “China Medical Devices White Paper 2020” data, in 2015-2020, China's household medical device market increased from 48 billion yuan to 152.1 billion yuan (household devices accounted for about 20% of the total medical device market in 2020). Compared to developed countries in Europe and the US, the penetration rate and frequency of use of medical devices in China is clearly insufficient. As residents' income levels (health care expenses) gradually increase, health awareness increases, and the population ages, the household medical device market with both medical and consumer attributes is expected to continue to grow.
The business division is clear and the product structure is high-end: Currently, the company has more than 600 product categories and nearly 10,000 product specifications. On the basis of continuing to develop cornerstone businesses such as blood pressure testing, temperature testing, traditional Chinese medicine equipment, and surgical instruments, the company focuses on the three core tracks of breathing and oxygen production, blood sugar and POCT, and disinfection sensing control, and is actively incubating high-potential businesses such as first aid, ophthalmology, and intelligent rehabilitation. The “basic business” has contributed to the company's basic market and stable performance; the “core circuit” has long-term growth capacity, and the company has achieved industry leadership; the “high potential business” has the characteristics of a high market ceiling, and the company has completed the initial layout. With the growth of the core circuit and high-potential business, the company's business structure is constantly being transformed to high-end.
First coverage, giving a “buy” rating: We expect the company's revenue for 2024-2026 to be 8.457 billion yuan, 9.762 billion yuan, and 11.123 billion yuan, respectively, up 6%, 15%, and 15% year on year, and net profit to mother of 2.54 billion yuan, 2,885 billion yuan and 2,889 billion yuan, respectively, up -10% year on year (higher return on asset disposal in 2023), 15% and 16%, respectively. We chose 2024 PE as a reference. Using a comparable company's 26 times PE calculation, the company's reasonable market value is 56.3 billion yuan, which has room to increase by about 49% compared to the market value of 37.8 billion yuan on June 26, 2024. It was covered for the first time and gave it a “buy” rating.
Risk warning: R&D risks, increased market competition, exchange rate fluctuations