Performance Brief
On July 8, 2024, the company released its 2024 semi-annual performance forecast. It is expected to achieve net profit of 0.527 billion yuan to 0.583 billion yuan in the first half of the year, +90% to +110% compared to the same period; net profit without return to mother 0.501 billion yuan to 0.557 billion yuan, or +91% to +112% year-on-year.
Looking at a single quarter, the company is expected to achieve net profit of 2.42 to 0.298 billion yuan in Q2, +199% to +268% year over year; net profit without return to mother of 2.30 to 0.286 billion yuan, or +215% to 291% year over year.
Management analysis
The perfusion business sector is developing well, and the profit side has achieved rapid growth. In the first half of 2024, the company continued to take advantage of its technology and market leadership in the field of hemoperfusion. The business development trend was good in the fields of kidney disease, liver disease, critical illness, etc. At the same time, various business activities were carried out on the principle of increasing efficiency and reducing costs. The increase in production scale effectively reduced unit production costs. The cost ratio declined year-on-year during the period, and the profit side achieved significant year-on-year growth.
The iterative superposition of new products and the expansion of application fields contributed to long-term additional growth poles. The company has leading innovation capabilities in the field of blood purification. There are 2 new products in the field of nephrology, the KHA and PhA series. The new products have significant advantages in adsorption performance, safety, and price compared to traditional HA series products. At the same time, products in the new application field of “liver disease+critical illness” of hemoperfusion devices are also expected to re-enter the accelerated promotion stage. The potential market space is huge, driving the company to achieve relatively stable profit margins under the pressure of the industry's medical insurance fee control.
The cost for dialysis patients will be reduced, and the frequency of use of hemoperfusion devices will increase. The penetration rate of hemoperfusion in hemodialysis patients is still relatively low, mainly affected by factors such as regional economies and differences in acceptance levels between doctors and patients. In the future, due to the combined effects of factors such as 1) the promotion and support of hemoperfusion technology by domestic experts in the field of blood purification, 2) the increasing friendliness of policies for hemoperfusion, and 3) the continuous reduction in treatment costs for patients with kidney failure, the frequency of hemoperfusion treatment is expected to increase at an accelerated pace, and the company is expected to directly benefit from the acceleration of the industry.
Profit Forecasts, Valuations, and Ratings
We are optimistic about the company's development prospects in the field of blood purification. We expect the company's 2024-2026 revenue to be 3.347, 4.444, and 5.63 billion yuan, +74%/+33%/+27% year-on-year; net profit to mother is 0.94, 1.267, and 1.633 billion yuan, +115%/+35%/+29% year-on-year, corresponding to PE at the current price, which is 23, 17, and 13 times, respectively, maintaining a “buy” rating.
Risk warning
Health insurance fee control policy risk; risk of developing projects falling short of expectations; risk of product promotion falling short of expectations; risk of hospital demand and product usage falling short of expectations.