Performance summary: The company achieved revenue of 0.857 billion/ +5.89% in the first three quarters of 2024, net profit of 0.257 billion/ +25.62%, revenue of 0.267 billion/ +6.45% in a single Q3, and net profit of 0.086 billion/ +21.51%.

Q3 The company's gross margin continued to increase by 0.25pcts to 70.07% month-on-month. The expense ratio decreased by 0.31 pcts to 41.69% year-on-year during the period, and net profit margin increased 2.92 pcts to 32.05% year over year, and profitability continued to increase.

With overseas and domestic collaborative development, IVD continues to grow rapidly. The company's in-vitro diagnosis business had revenue of 0.679 billion yuan in the first three quarters, with revenue in China of 0.442 billion yuan/ +15.17%, and overseas revenue of 0.237 billion yuan/ +25.74%. We estimate that Q3's in vitro diagnostic business domestic revenue was 0.123 billion/ +5.56%, and overseas revenue was 0.088 billion/ +23.81%, continuing the trend of overseas growth faster than domestic sales this year.

Based on research and development, we continue to enrich our product line. The company continued to increase R&D investment, with R&D expenses of 0.152 billion yuan/+0.013 billion yuan in the first three quarters of 2024. Q3 is promoting two new assembly lines, LiFOLAS8000 and LiFOLAS9000. Among them, LiFOLAS8000 has the characteristics of high degree of automation, fast testing time, and small floor area. It is especially suitable for outpatient emergency care and other scenarios requiring high floor efficiency ratio. We look forward to the promotion and installation of assembly lines to drive reagent sales in the future. Furthermore, in Q3, the company launched a test kit for 25-hydroxyvitamin D using small molecule sandwich technology and an innovative bronchoscopic microscope, and continues to enrich the product line.

The new equity incentives maintain a high growth assessment target. Q3 The company announced the 2024 equity option incentive plan, based on 2023 revenue or net profit, and the 2024/2025/2026 assessment growth target is not less than 23%/46%/69%, demonstrating the company's confidence in long-term growth.

Profit forecast: We expect the company's net profit to be 0.404/0.494/0.597 billion yuan in 2024/2025/2026, up 23.0%/22.3%/20.7% year-on-year. The current stock price corresponds to the 2025 valuation of 14.1X, maintaining a “buy” rating.

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.