Key points:

Steady growth in H1 results in 2024

In the first half of 2024, the company achieved operating income of 1.001 billion yuan, an increase of 27.03% over the same period of the previous year; achieved net profit attributable to shareholders of listed companies of 0.343 billion yuan, an increase of 33.09% over the same period of the previous year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 0.328 billion yuan, an increase of 35.20% over the same period last year. 2024H1 gross sales margin is about 72.75%, and net sales margin is about 33.77%. The company's performance is steady, and has maintained a net profit growth rate of more than 30% for many years, showing good growth.

The volume of 3D electrophysiology surgeries grew rapidly, and the interventional business maintained steady development in the first half of the year. Huitai Medical added electrophysiology products to more than 150 hospitals in China, covering more than 1,250 hospitals. At the same time, the domestic electrophysiology business was upgraded from traditional two-dimensional surgery to three-dimensional surgery as scheduled, and a good 3D product market brand was established. During the reporting period, the company completed about 7,500 3D electrophysiological surgeries in more than 800 hospitals. The number of surgeries increased by more than 100% over the same period in 2023, which shows that the company's products have been widely recognized clinically. Currently, the company's adjustable 10-pole coronary sinus catheter continues to maintain a leading share in this category market segment. The adjustable curved sheath tube was approved through a volume procurement project, and the usage volume exceeded 5,000 during the reporting period.

In addition, the company's intervention business also maintained steady growth. During the reporting period, the coverage rate and inpatient penetration rate of the company's vascular intervention products further increased. The number of admissions for coronary products increased by nearly 20% over the same period last year, and admissions for peripheral products increased by more than 30%, covering nearly 4,000 hospitals as a whole.

Overseas business development is impressive. While its own brands of electrophysiology grew by more than 60% year-on-year during the reporting period, Huitai Medical continued to grow in the face of multiple challenges such as geopolitical changes, global economic fluctuations, and exchange rate changes. Overall, the CIS region had outstanding performance, with a year-on-year increase of 124%; Europe increased 51% year over year; Asia Pacific, Latin America, Middle East Africa and other regions showed significant year-on-year growth.

In terms of product lines, coronary and peripheral independent brands and independent electrophysiological brands continued to be the main driving force for the company's international business growth. The coronary and peripheral independent brand business increased 43.77% year on year in the first half of the year; independent electrophysiological brands increased 63.04% year on year.

R&D progressed smoothly, and many products were approved during the reporting period

The company has always insisted on R&D and innovation, and continued to invest high in R&D. The company's R&D investment in the past three years and the first phase was 134.8768 million yuan, 174.8763 million yuan, 237.9156 million yuan and 133.8935 million yuan respectively, accounting for 16.28%, 14.38%, 14.42% and 13.38% of revenue.

During the reporting period, the company made continuous progress in its research projects. Thoracic aortic laminating stent systems, guide wires, radial artery hemostatics, contrast catheters, medical negative pressure aspirators, disposable cardiac electrophysiological labeling catheters, coronary thrombus aspiration catheters, etc. have obtained registration certificates.

Furthermore, by the end of the reporting period, the carotid stents, TIPS laminating stents, and abdominal aortic stents in the coronary and peripheral product line had entered clinical trials. The electrophysiology product line's ongoing research projects such as pulse ablation catheters, pulse ablation instruments, and high-density standard measurement catheters have entered the 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.

The company's continuous development of iterative electrophysiology and innovative interventional products is expected to be the driving force for continued growth in future performance.

Investment advice

The company's intervention business is developing steadily, and the market coverage continues to increase. At the same time, it has a competitive advantage in the field of cardiac electrophysiology. The 3D electrophysiology business is growing at an impressive rate, and the company as a whole has good growth potential. The company is expected to achieve revenue of 2.093/2.628/3.216 billion yuan in 2024-2026, net profit to mother of 0.737/0.925/1.131 billion yuan, and corresponding EPS of 7.61/9.54/11.67 yuan, respectively. Covered for the first time, the company was given an “increase in weight” rating.

Risk warning

Risk of failure in new product development; risk of price reduction in product collection; increased risk of industry competition.