Matters:
On June 27, 2024, the company announced a 24-year restricted stock incentive plan. It plans to grant 576,000 restricted shares to 28 incentive recipients at a price of 22.80 yuan/share, of which 461,000 shares will be awarded for the first time.
After a lapse of one year, the company introduced another incentive plan. Currently, the 23-year incentive plan is still being implemented. The two-phase incentive plan covers nearly 80 employees, which is expected to fully motivate employees at all levels.
Commentary:
A new round of incentive plans was released in 2024, demonstrating confidence in the company's performance growth. The performance assessment target for this incentive plan with a 100% company-level ownership ratio is: based on 23 years, the 24-26 revenue growth rate should not be less than 23%, 61%, or 103%, that is, no less than 2.84, 3.72, and 469 million yuan. The 24-25 performance review goals are consistent with the previous incentive plan.
The impact of harvesting changed from negative to positive. The company's products are all high-value neurosurgical consumables, and most of them are included in collection. The collection has a negative impact on the company's existing products, but it is more positive for other new products.
The impact of collection on dural products has bottomed out, and the business is expected to grow steadily in the future. Regarding the three businesses of PEEK craniomaxillofacial repair and fixation, absorbable hemostatic yarn, and meningeal gel, we believe that collection is expected to accelerate the three market segments in terms of old technology replacement, imported product replacement, and new product market introduction, thereby benefiting the company.
Expand existing product indications and application departments, and continue to develop new products. Based on existing products, the company is guided by clinical needs and continues to expand product indications and application departments, and the potential market space for absorbable hemostatic yarn and meningeal gel products is expected to expand further. Furthermore, the company leverages the advantages of diversified advanced manufacturing technology platforms and continues to develop new products such as hemostatic powder and oral absorbable repair film.
Overseas markets continue to grow at a high rate. According to Research and Markets, the global neurosurgical device market will reach $7.17 billion in 2022, with a CAGR of 12.5% between 2022 and 2027. The company's products have been approved overseas one after another, the marketing system has been gradually improved, and overseas revenue has achieved continuous high growth. The CAGR reached 35% between 2017 and 2023.
Investment advice: We maintain profit forecasts. Taking into account incentive costs, the company's net profit for 2024-2026 is expected to be 0.6, 0.8, and 120 million yuan, respectively, up 49.1%, 38.1%, and 45.5% year-on-year. The corresponding EPS is 0.92, 1.27, and 1.85 yuan, respectively. The company is given a 55 times valuation in 2024, corresponding to a target price of about 51 yuan, maintaining a “recommended” rating.
Risk warning: 1. Price reduction exceeds expectations; 2. Post-harvesting volume falls short of expectations; 3. Promotion of new products falls short of expectations.