Key points of investment

Incident: 24H1's revenue reached 1.001 billion yuan (+27%, same below), net profit to mother 0.343 billion yuan (+33%), net profit not attributable to mother of 0.328 billion yuan (+35%). 24Q2 revenue achieved 0.546 billion yuan (+24.5%), net profit attributable to mother 0.202 billion yuan (+30.8%), and net profit not attributable to mother 0.191 billion yuan (+25.5%). 24Q2 profit exceeded our expectations.

The share of coronary and peripheral business revenue increased in the first half of the year, and the volume of 3D electrophysiology surgeries increased markedly: in the first half of 2024, the coronary pathway revenue was 0.503 billion, accounting for 50.27% of revenue; electrophysiological revenue was 0.223 billion, accounting for 22.31% of revenue. The company's 3D cold saline ablation catheter achieved more than 10,000 surgeries in 2023, and completed about 7,500 surgeries in the first half of 2024, fully confirming the safety and efficacy of the product in the field of non-atrial fibrillation treatment. It was widely recognized by the market; revenue from peripheral intervention was 0.175 billion, accounting for 17.50% of revenue; OEM revenue was 0.074 billion, accounting for 7.35%; revenue from non-vascular interventional consumables was 0.016 billion, accounting for 1.63% of revenue.

Net margin and gross margin increased year-on-year, and the operating trend is improving: 24Q1 gross profit margin 72.01% (+1.34pct, same below), net profit margin 30.28% (+2.03pct), 24Q2 gross profit margin 73.36% (+0.77pct), net profit margin 36.69% (+1.59pct). 24H1 sales expenses 0.177 billion yuan (+17.55%), sales expense ratio 17.70% (-1.43pct); management expenses 0.046 billion yuan (+30.43%), management expenses rate 4.62% (+0.12pct); R&D expenses 0.134 billion yuan (+22.92%), R&D expenses rate 13.38% (-0.44pct).

The company made continuous progress in research projects in the first half of the year: in the first half of this year, the company's thoracic aortic stent system, guide wire, radial artery hemostasis, contrast catheter, medical negative pressure aspirator, disposable cardiac electrophysiological labeling catheter, coronary thrombus suction catheter, etc. obtained domestic registration certificates. By the end of the reporting period, products such as venous filters, spring rings, curved bidirectional adjustable guide sheath tubes, peripheral high pressure balloon dilatation catheters, disposable interventional surgical kits, ring handle syringes, pressure extension tubes, connecting plates, etc. had entered the domestic registration and repair stage, and carotid artery stents, TIPS laminating stents, and abdominal aortic stents had entered the domestic clinical trial stage. Pulse ablation catheters, pulse ablation catheters, high-density calibration catheters, pressure radiofrequency measurement catheters, pressure-sensitive ablation catheters, magnetoelectric positioning pressure-sensing pulse ablation catheters, magnetoelectric positioning pressure-sensing radiofrequency ablation catheters, magnetoelectric positioning annular labeling catheters, magnetoelectric positioning adjustable bending electrode catheters, etc. have entered the domestic registration review stage. Ureteral stents and accessories and ureteral dilatation balloon catheters in the urological system product line have all entered the registration review stage.

Profit forecast and investment rating: We consider that in the second half of the year, the company's backbone is expected to quickly cover the market through national procurement led by Hebei, and raise the net profit from 2024-2026 from 0.723/0.976/1.306 billion yuan to 0.725/0.997/1.339 billion yuan. The PE valuation corresponding to the current market value is 48/35/26 times, respectively. Considering that the company will launch new electrophysiotherapy products next year, it maintains a “buy” rating.

Risk warning: Risk of major changes in industry policies, risk of product sales and promotion falling short of expectations, etc.