occurrences
The company released its 2024 mid-year report. In the first half of 2024, the company achieved revenue of 0.354 billion yuan (yoy +22.29%), net profit to mother 0.006 billion yuan (yoy -85.13%), and gross sales margin of 71.46% (yoy-4.82pp).
Among them, in the second quarter of 2024, the company achieved revenue of 0.184 billion yuan (yoy +12.61%); net profit to mother of 0.003 billion yuan, a month-on-month growth rate of 5.17%, and a gross sales margin of 66.91% (yoy-9.45pp).
Incident reviews
Both at home and abroad are growing steadily. The domestic market is expected to accelerate tendering in the second half of the year 2024. The company's domestic revenue is about 0.286 billion yuan (yoy +22.26%), and foreign revenue is 67.81 million yuan (yoy +22.40%). In the first half of 2024, the company's domestic revenue growth rate slowed down compared to the company's high growth rate of around 30-50% in the previous quarter. We think it was mainly due to the slowdown in tendering due to industry restructuring and equipment renewal policies not yet implemented. It is expected that with the gradual improvement of tenders in the second half of the year, the revenue growth rate is expected to increase. The company has also focused on expanding overseas markets in recent years. In the first half of 2024, the company also made many progress in entering the international market. A series of competitive models were approved for sale in many countries or regions such as the European Union, Brazil, South Korea, and Russia.
The company attaches great importance to research and development, and new products are constantly being launched. In the first half of 2024, the company invested about 87.3368 million yuan in R&D, an increase of 25.48% over the previous year, accounting for 24.70% of revenue.
As of June 30, 2024, the company had 268 R&D personnel, accounting for 21.46% of the total number of people in the company. In March 2024, the company successively launched electronic percutaneous cholangioscopy and electronic cystoscopy, moving from the fields of gastroenterology and respiratory medicine to the fields of hepatobiliary surgery and urology, which can ensure that the lens enters a finer natural cavity, providing more options for clinical examination and discovery. In May 2024, the company released an electronic ureteropyroscope. The ultra-fine outer diameter lens can enter a narrow ureter to help treat urinary stones.
Expense rates have increased a lot, which affects the company's profits in the short term
In the first half of 2024, the company's sales expenses were 0.123 billion yuan (yoy +44.93%), with a sales expense ratio of 34.69% (yoy+0.52pp), mainly due to a large increase in employee remuneration, travel expenses, etc., and the increase in depreciation and amortization of the company's market prototype investment, and related repair costs followed; the company's management expenses were about 0.059 billion yuan (yoy+45.89%), and the management expenses ratio was 16.6% (yoy+2.69pp), mainly due to the increase in employee remuneration, share payments and travel ; The company's R&D expenses are about 0.087 billion yuan (yoy +25.48%), and the R&D expense ratio is 24.7% (yoy+0.62pp), mainly due to increased expenses such as employee remuneration and travel expenses.
Investment advice
We expect the revenue side of the company to achieve 0.997 billion yuan, 1,401 billion yuan, and 2.004 billion yuan respectively in 2024-2026 (previous value was 1.048 billion yuan, 1.453 billion yuan, 2.005 billion yuan), year-on-year growth of 47.0%, 40.5%, and 43.1%, respectively. Net profit to mother in 2024-2026 is expected to reach 0.045 billion yuan and 0.167 billion yuan. 0.279 billion yuan (previously 0.107 billion yuan, 0.176 billion yuan, 0.282 billion yuan), year-on-year increases were -22.4%, 272.6%, and 66.5%, respectively. EPS corresponding to 2024-2026 is about 0.33 yuan, 1.24 yuan, and 2.07 yuan, respectively. The corresponding PE valuations are 117 times, 31 times, and 19 times, respectively. Considering that the company is a leading domestic soft mirror equipment company, the brand value is already prominent. High-end equipment such as AQ-300 drives the company's profitability to continue to increase and maintain a “buy” rating.
Risk warning
the risk of new product development and promotion falling short of expectations;
Market competition heightens risk.