Incident: The company announced that 2024H1 achieved revenue of 0.264 billion yuan, an increase of 28.43% year on year; net profit to mother of 0.124 billion yuan, up 57.93% year on year; net profit after deducting 0.12 billion yuan, up 56.33% year on year; gross profit margin of 71.55%, up 2.78 pct year on year.

The main business and overseas revenue are growing rapidly. The company achieved significant performance growth in the first half of 2024, due to continued high growth rates in the Chinese and US markets, and rapid growth in sales of GI and ESD/EMR products. Among them, sales revenue of GI products was 0.172 billion yuan, and sales revenue of EMR/ESD products was 0.063 billion yuan. In the first half of 2024, the company's main revenue in the domestic market was 0.125 billion yuan, up 21.98% year on year; the main business revenue in the overseas market was 0.138 billion yuan, up 35.28% year on year. Among them, the Asia Pacific region grew 82.86% year on year, North America grew 68.49% year on year, South America grew 53.74% year on year, and its own brand sales accounted for nearly 30%. The company actively explores the global market, adding 14 new overseas cooperative customers, 198 newly developed hospitals, 400 effective channels, and gradually increasing the number of dealers, terminal hospitals and sales area coverage.

The R&D cost rate has increased, and the sales and management cost rate has decreased. In the first half of 2024, the company's R&D expenditure rate was 9.79%, up 1.03 pct year on year. R&D investment was 0.026 billion yuan, an increase of 43.60% year over year, mainly due to the increase in R&D investment in soft endoscopy and adjuvant treatment robot products and the increase in R&D personnel. In the first half of 2024, the company's sales expense ratio was 10.58%, down 0.76pct year on year; the management expense ratio was 9.11%, down 0.51 pct year on year. The company attaches importance to product innovation and technological development, and effective cost control.

Investment advice: Expected revenue for 2024-2026 is 0.664, 0.845, 1.09 billion yuan, 30.5%, 27.3%, and 28.9%; net profit to mother 0.281, 0.352, 0.456 billion yuan, 29.6% YoY; gives a “gain” rating.

Risk warning: Market competition increases risk; risk of product quality; risk of trade friction and exchange rate fluctuations; risk of policy changes; risk of volume procurement; risk of macro-environmental risk; risk of intellectual property leakage; risk of brain loss.