Introduction to this report:
The company's 2024H1 performance is growing strongly. It plans to wholly-owned Lombard, which is expected to protect the global development strategy. At the same time, it is expected to further enrich products and technology to enhance competitiveness, bring increased performance, and maintain an increase in holdings rating.
Key points of investment:
Maintain an increase in holdings rating. Considering the company's good business situation, the 2024-2026 EPS forecast was raised to 5.37/6.97/8.91 yuan (originally 5.22/6.82/8.77 yuan). Referring to the industry valuation situation, the 2024 target PE was given 28X, maintained the target price of 150.13 yuan, and maintained an increase in holdings rating.
Strong growth in performance. According to preliminary estimates, in 2024H1, the company achieved revenue of 7.77 to 0.808 billion yuan, a year-on-year increase of 25-30%, and net profit to mother of 3.91 to 0.419 billion yuan, a year-on-year increase of 40 to 50%. Strong growth in performance, slightly exceeding expectations, mainly due to continued release of innovative products and improved operating efficiency.
It is proposed to wholly own Lombard to protect the global development strategy. The company announced that it intends to use its own capital of 65 million dollars to transfer the remaining 72.37% of the shares in OMD, a joint venture company held by an unrelated party. After the transaction is completed, it will fully control the OMD platform and its subsidiary Lombard. Lombard is a British aortic stent company. Its core products include two main products, Aorfix and Altura. It has more than 20 years of product promotion history in developed countries such as Europe, America, and Japan, and its products cover 23 countries worldwide. Since 2017, the company has cooperated with Lombard in production, product registration, and agent sales. In March 2022, it obtained 27.63% of OMD's preferred shares through transfer and capital increase. After this transaction, it will achieve wholly-owned ownership, and is expected to:
① Securing the global development strategy: Previously, Lombard had used its professional sales team and mature agent network in Europe to help cover the company's products in the European market, accelerate the registration and promotion of the company's innovative products in Europe, and help increase overseas revenue from 0.03 billion yuan in 2021 to 0.082 billion yuan in 2023, with a compound growth rate of 65%. After this wholly-owned holding, it is expected that the stability and depth of cooperation between the two parties will be further enhanced, and the rapid construction and depth of cooperation between the two sides can be achieved using OMD as a basis for rapid construction and guarantee of European business centers Continuous and stable implementation of the company's internationalization strategy to effectively diversify the risks of the single market environment;
② Further enrich products and technology to improve competitiveness: Lombard's two main products are unique and innovative, and can complement the company's products to meet the treatment needs of different cases. The company can also learn its unique structural design and manufacturing process through foundry to further enhance its technical and market competitiveness in the field of aortic and peripheral intervention; ③ Bringing in increased performance: OMD's revenue was about 0.112 billion yuan in 2023, an increase of 43.55% over the previous year, and losses gradually narrowed. From January to January 2024, there was a slight loss throughout the year. It is expected to turn a loss into a profit, and the next few years are expected to increase the company's performance.
Catalysts: Cooperation with Lombard achieves further results
Risk warning: collection risk, risk of this transaction not progressing smoothly