Incident: The company announced that in the first three quarters of 2024, the company achieved total operating income of 1.382 billion yuan (-9.29%, year-on-year growth rate, same below), net profit to mother of 0.172 billion yuan (-27.41%), and net profit of 0.158 billion yuan (-26.92%) after deducting non-return to mother. The results were in line with our expectations.

The company's single Q3 results were in line with expectations. Single Q3 revenue reached 0.46 billion (+6.07%), net profit to mother 0.047 billion (+57.40%), after deducting non-net profit of 0.044 billion (+77.83%). In Q3, the domestic market was still pressured by the macroeconomic environment. The domestic sales monitoring line declined, and export sales continued to perform well.

Single Q3 gross margin remained stable year over year, and net profit margin increased year over year. In the 2024Q3 quarter, the company's gross sales margin/net sales margin was 57.00%/10.14%, respectively, with year-on-year changes of -0.29pct/3.59pct. The company's gross margin remained at a relatively stable level under the domestic macro environment, and net profit margin increased year-on-year due to overseas recovery. The sales/management/R&D expense rates of the single Q3 company were 22.92%/5.97%/17.53%, respectively. The year-on-year change was -3.22pct/-1.45pct/-1.79pct, and the cost control was good.

We are optimistic that the company's domestic business will gradually resume next year. The company launched the blockbuster i500 wet blood gas analyzer this year to achieve a matrix layout of a full range of dry+wet high-performance blood gas products. The competitiveness of the Blood Gas business is strong. Considering the promotion of new products and catalyzed domestic equipment renewal policies next year, the company's domestic business is expected to gradually resume.

Profit forecast and investment rating: Considering the current pressure on the industry environment and increasing competitive pressure on the market, we adjusted the company's net profit from 0.242/0.292/0.354 billion yuan to 0.196/0.251/0.307 billion yuan. The PE valuation corresponding to the current market value is 32/25/20 times, respectively. Considering that domestic equipment procurement is expected to resume next year, we maintain a “buy” rating.

Risk warning: The risk that market competition will intensify and the development or promotion of new products will fall short of expectations.