1H24's performance grew rapidly, and profitability recovered significantly. 1H24 achieved total revenue of 0.499 billion yuan (YoY +29.63%), achieved total profit of 0.035 billion yuan (YoY +303.72%), achieved revenue of 0.25 billion yuan (YoY +12.56%, QoQ +0.5%) in a single quarter corresponding to 2Q24, and achieved net profit of 0.021 billion yuan (YoY +2.19%, QoQ +55.02%). By product, the company's household medical products generated revenue of 0.348 billion yuan (YoY +32.13%), gross profit margin of 33.34%, household health products 0.108 billion yuan (YoY +53.64%), and gross profit margin of 38.01%. 1H24's consolidated gross margin was 36.61%, up 8.27pct from the same period last year.
The health IoT business covers multi-dimensional sign detection, and many products are Class II medical devices. The company has been deeply involved in the field of smart health for more than 20 years, and has ODM capabilities for medical-grade smart wearable products. Customers include Weilun, WITHINGS, Braun, Philips, etc. The company has a complete line of multi-dimensional sign monitoring products, including smart electronic blood pressure monitors, electronic weight scales, electronic kitchen scales, fat meters, and ECG testing equipment. 1H24 adds smart blood sugar meters and OTC hearing aids; smart wearable products include smart bracelets, smart watches, etc., which have all been certified as Class II medical devices except scales and bracelets. In the first half of the year, the company's OTC hearing aids entered well-known OTC pharmacy chains. In the future, it will expand deeply into European and American markets and accelerate its entry into emerging markets such as Southeast Asia.
RPM's package solutions are deeply supplied to major European and American customers and are an important part of medical digitalization. Remote health management (RPM) is a medical service model that measures and transmits users' vital signs data through a series of devices, and sends the data back to medical service providers to provide users with personalized health assessment, risk warning, and health guidance services. RPM is an important part of the modernization and digital transformation of the healthcare industry. It has developed rapidly in the European and American markets in recent years. The company provides customers with RPM package solutions based on health IoT hardware ODM capabilities and superimposes follow-up data transmission, analysis and feedback. The company has established deep cooperation with leading RPM customers in Europe and the US, such as Teladoc, Livongo, Lark, etc. As global healthcare spending grows and medical digitalization progresses, the RPM market is expected to increase.
AI+ medical, digital health service business launched as a single product. Digital health services mainly include blood pressure management services and remote dynamic ECG services. The company's 12-lead smart ECG was unveiled at the Huawei Developers Conference held on June 21. It has advantages such as insensitive wear and real-time monitoring, and won the 2023 German iF Design Award. It is a Class II medical device in China and is suitable for clinical application scenarios such as risk screening of patients and post-operative follow-up management of patients. With the official launch of 12-lead core electric coats for a wider range of users and development groups, the company is expected to usher in a new large number of single products.
Investment advice: Raise profit forecasts and maintain the “better than the market” rating. 1H24's gross margin improved significantly, higher than previously anticipated, so we raised the company's profit forecast. Net profit to mother for 2024-26 was raised from 0.05, 0.064, and 0.084 billion yuan to 0.073, 0.094, and 0.123 billion yuan (YoY +111.1%, 28.9%, 31.8%). The PE corresponding to the current market value is 26, 20, and 15x, maintaining a “superior to market” rating.
Risk warning: Emerging market expansion falls short of expectations; industry competition intensifies; new product development falls short of expectations.