Performance summary: In 2024, the company achieved revenue of 0.59 billion/ +5.64%, net profit of 0.172 billion/ +27.78%, single Q2 achieved revenue of 0.284 billion/ +1.27%, and net profit to mother 0.065 billion/ +39.33%. 24h1's gross margin increased by 4.60 pcts year-on-year to 69.82%, and the cost ratio decreased by 2.83 pcts to 36.23% during the period. The overall profit side performance exceeded expectations.
In vitro diagnosis business: Overseas growth is impressive, and we look forward to assembly line promotion. The company's in vitro diagnostic business H1 revenue was 0.468 billion yuan/ +21.67%. Its revenue in China was 0.319 billion yuan/ +7.96%, and overseas revenue was 0.149 billion yuan/ +26.91%. In response to the IVD assembly line trend, the company launched the fully automatic electrochemiluminescence immunoassay line LiFOLAS8000 and the full-laboratory automated assembly line LiFOLAS9000 during the reporting period. It is expected that the promotion of the H2 assembly line will drive the company's equipment and reagent revenue.
Treatment and rehabilitation business: Clinical care is under short-term pressure, and H2 is expected to improve month-on-month. The company's treatment and rehabilitation business H1 achieved revenue of 0.114 billion yuan/ -31.96%. We determined that the short-term revenue pressure was mainly due to the high demand base for respiratory equipment etc. benefiting from the epidemic during the same period last year. It is expected that the revenue growth rate of the H2 treatment and rehabilitation business will improve sequentially.
The company focuses on product optimization and development, upgraded high-flow medical respiratory humidifiers and air wave pressure treatment systems in clinical medicine, and obtained product registration certificates. In medicine and aesthetics, we continue to promote research and development of equipment including pulsed laser therapy machines and photonic beauty devices.
Expand the product pipeline and lay out medical cryotherapy systems. The company also announced a capital increase of RMB 22.5 million for Chengdu An Jiechang to acquire 15% of its shares. An Jiechang is a national high-tech enterprise. It has a variety of energy surgery equipment. Its medical cryotherapy system has obtained national three medical device registration certificates, which are scarce in China. An Jiechang will collaborate with the company's clinical medical product line, which is conducive to further improving the diversification of the company's business products and market competitiveness.
Profit forecast: We expect the company's net profit to be 0.412/0.504/0.629 billion yuan respectively, up 25.4%/22.3%/24.8% year-on-year. The current stock price corresponds to the 2024 valuation at 13.7X. Considering the significant increase in the company's profitability, the rating was raised to “buy” with reference to comparable company valuations.
Risk warning: Product development, approval and promotion progress falls short of expectations; in vitro diagnostic equipment collection risks; medical and aesthetic industry policy risks and medical accident risks; increased industry competition affects sales and profits.