Incident: The company released a report for the third quarter of 2024. In the first three quarters of 2024, the company achieved operating income of 0.97 billion yuan, a year-on-year increase of 9.13%, and achieved net profit due to mother of 0.553 billion yuan, an increase of 42.46% over the previous year; realized net profit without deduction of 0.502 billion yuan, a year-on-year increase of 37.37%

On a quarterly basis, in the third quarter of 2024, the company achieved operating income of 0.182 billion yuan, a year-on-year decrease of 31.65%, mainly due to price adjustments for chest owners and abdominal laminating stents; net profit to mother of 0.105 billion yuan in a single quarter, an increase of 37.57% year on year; realized net profit deducted from 0.115 billion yuan, an increase of 9.56% year on year. The significant profit side growth was mainly due to factors such as one-time investment income generated by the transfer of OMD shares and current government subsidies.

Expense side: The company's sales expense ratio for the first three quarters of 2024 was 9.52%, down 0.51 pp year on year; management expense ratio was 4.69%, up 0.32 pp year on year; R&D expense ratio was 7.35%, down 5.91 pp year on year, mainly because the company optimized team structure, focused on high-potential projects, and improved R&D capital utilization efficiency; financial expense ratio -1.24%, down 0.45pp year on year; the company's gross profit margin for the first three quarters of 2024 was 75.50%, down 1.36pp year on year, mainly affected by price adjustments for aortic stents and other products, net profit margin 56.44%, up 13.12pp year over year.

Terminal price adjustments, collection and implementation affect short-term performance, and continuous repurchases demonstrate long-term confidence. Since the third quarter of 2024, the company has adjusted the sales prices of thoracic aortic stent and abdominal aortic stent products after communication with the Health Insurance Administration. Among them, the price of thoracic stent terminals has been reduced by about 40%, and the price of abdominal stent terminals has been reduced by about 25-30%. At the same time, regional collection of some peripheral balloon products has begun to be implemented, which has had a certain impact on the company's current performance. The company actively embraces changes in the policy environment and negotiates and cooperates with distributors and purchasers. The impact of future related matters is expected to gradually be eliminated. At the same time, the company is actively participating in the collection of peripheral products such as venous stents, and is expected to further accelerate the hospitalization and promotion of corresponding products in the future; more specialty interventional products in various fields such as venous, peripheral, and oncology are expected to consolidate momentum for the company's medium- to long-term performance growth. Up to now, the company has repurchased 0.894 million shares, with a total payment amount of about 0.08 billion yuan. The company plans to further use its own funds and special stock repurchase loans to increase repurchase efforts. The new round of repurchase amounts is expected to be 0.1-0.2 billion yuan, fully demonstrating the company's long-term confidence and strategic strength in future development.

Profit forecast and investment suggestions: According to the company announcement, we expect that external policies such as collection may cause short-term disturbances, and profit levels are expected to increase further, driven by cost optimization and capacity expansion. We expect the company's revenue to 2024-2026 to 1.205, 1.505, and 1.881 billion yuan, up 1%, 25% year on year; net profit from 2024-2026 is expected to be 0.48, 0.626, and 0.783 billion yuan, up -3%, 30%, and 25% year on year. The company's current stock price corresponds to 26, 20, and 16 times 2024 to 2026. Considering that the company is a leading domestic vascular intervention company and has a significant competitive advantage, it is expected to maintain a high growth trend and maintain a “buy” rating in the future with a series of innovative aortic and peripheral intervention products.

Risk warning events: New product development, increased market competition, and the risk that public data used in research reports may be delayed or not updated in a timely manner.