Performance Brief
On August 23, 2024, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 3.384 billion yuan, -21% year over year; net profit to mother 0.697 billion yuan, -27% year over year; realized net profit without return to mother 0.647 billion yuan, -28% year over year.
2024Q2 achieved revenue of 1.462 billion yuan, -22% YoY; net profit attributable to mother 0.215 billion yuan, or -41% YoY; realized net profit of 0.191 billion yuan without return to mother, or -44% YoY.
Management analysis
Cardiovascular equipment products are growing steadily, and the structural core business has performed well. In the first half of the year, the company's cardiovascular implant business achieved revenue of 1.151 billion yuan, +16.9% year-on-year, of which the coronary implant intervention business revenue was 0.851 billion yuan, +10.2% year-on-year, and the structural heart disease business revenue was 0.2489 billion yuan, +53.6% year over year. Since 2022, the fourth-generation memoSorb fully degradable occluder series products (ventricular septal defects, unclosed oval holes, atrial septal defects) have been approved and marketed one after another, achieving rapid commercialization and good clinical performance. Furthermore, the overseas business achieved revenue of 0.489 billion yuan, +2.6% year over year, gross margin of +3.23 pct year over year, and smooth international expansion.
The pharmaceutical and medical services business is under pressure in the short term and is expected to return to a growth trajectory in the future. The company's pharmaceutical sector achieved revenue of 1.135 billion yuan in the first half of the year, of which pharmaceuticals (generic drugs) achieved revenue of 0.939 billion yuan and API revenue of 0.196 billion yuan. Pharmaceutical business adjustments brought about by the clean-up of retail channel inventory are expected to continue for 1-2 quarters, but subsequent recovery in pure sales is expected to drive revenue in the pharmaceutical sector to rise again. The medical services and health management sector achieved revenue of 0.496 billion yuan, or -27.8%. Based on strategic business sector adjustments, the company's requirements for some businesses within the sector have changed from continuous revenue growth to stable profits.
Research and development of Minwei Biology continues to advance, and innovative drugs with three targets are expected to be the first to be approved. Minwei Biotech, an innovative pharmaceutical company controlled by the company, focuses on cardiovascular, endocrine, and metabolic diseases and their complications. Its self-developed GLP-1/gcGR/GIP-FC fusion protein MWN101 has carried out phase II clinical trials for type II diabetes and obesity, respectively. It is the first GLP-1 GLP-1 product with three targets of GLP-1/GCGR/GIP-FC to enter clinical phase II in China. Furthermore, the new drug MWN105 has been officially declared IND, and MWN109 is about to enter the IND application stage.
Profit Forecasts, Valuations, and Ratings
We expect the company's net profit to be 1.789, 2.139, and 2.528 billion yuan respectively in 2024-2026, +42%, +20%, and +18% over the same period. The PE corresponding to the current price is 12, 10, and 8 times, maintaining the “buy” rating.
Risk warning
Health insurance fee control policy risks; risk of new product development falling short of expectations; risk of product promotion not meeting expectations; risk of impairment of goodwill.