Core views:

24H1 revenue showed a steady and steady growth trend, and the pressure on performance was mainly due to losses at subsidiaries. The company released its 2024 mid-year report, 2024H1. The company's revenue was 0.3 billion yuan, up 2.9% year on year, net profit to mother was 27.47 million yuan, and loss increased 18.6% year on year. According to our previously issued “Medical IT Order Tracking: Orders from January to June '24 showed a steady and steady growth trend”, the total order amount for the medical IT industry in January-June '24 was 2.98 billion yuan, an increase of 2.5% over the previous year, which is basically in line with the company's 24H1 revenue growth rate. 2024H1's performance loss increased year-on-year, mainly due to short-term losses due to the company's subsidiaries in the business start-up period or bankruptcy and restructuring period.

2024H1's gross margin was 48.03%, up 2.51 percentage points from the same period of the previous year, mainly due to further improvement in the maturity of the company's products and a decrease in project costs.

The company strengthened internal management, and the rate decreased during the period. The 2024H1 company's sales/management/R&D expense rates have all declined. According to the Investor Relations Activity Record Form released by the company on May 7, 2024, the company's order volume is expected to maintain a steady growth trend throughout the year. Performance is expected to rebound due to the combined effects of the company's increased gross margin, reduced period rates, and loss reduction in subsidiaries' losses.

Specialist electronic medical records and specialist disease prevention and control capabilities have made outstanding progress. After the subsidiary Ander Medical Intelligence entered the implementation period of the restructuring plan, it began business cooperation with the company in the field of emergency and emergency medical records, including the upgrade and development of platform systems such as stroke centers, chest pain centers, and trauma centers. At present, the company has deeply integrated Ander Medical Intelligence's image-assisted diagnostic products and ultrasound-assisted diagnostic product modules into the emergency diagnosis process. The company innovated the disease management model. The “virtual ward” model has been applied in 6 departments of Peking Union Medical College Hospital, and its capture accuracy rate is close to 95%.

Profit forecasting and investment advice. The company's net profit due to mother in 2024-2026 is estimated to be 0.072/0.103/0.121 billion yuan, respectively, and the corresponding EPS is 0.52/0.75/0.88 yuan per share, respectively. Referring to comparable company valuations, the company was given a reasonable valuation multiplier of 40 times PE in 2024, with a reasonable value of 20.81 yuan/share to maintain a “buy” rating.

Risk warning. Industry demand recovery falls short of expectations; implementation of relevant policies falls short of expectations; application of new technologies such as AI falls short of expectations; industry competition intensifies.