occurrences

The company released its three-quarter report for 2024. In the first three quarters of 2024, the company achieved revenue of 29.48 billion yuan (+8.0% YoY); net profit to mother of 10.64 billion yuan (+8.2% YoY), a year-on-year growth rate of about 11% after excluding the impact of exchange gains and losses.

In the third quarter of 2024, the company achieved revenue of 8.95 billion yuan (+1.4% YoY); net profit to mother of 3.08 billion yuan (-9.3% YoY).

Incident reviews

Domestic growth is under pressure, and overseas markets maintain high growth

The domestic market grew 1.9% in the first three quarters of 2024 and declined 9.7% in the third quarter. Public hospital tenders operate at a low level, and demand for non-rigid medical treatment is weakening, putting pressure on the domestic market as a whole. The international market grew 18.3% in the first three quarters and 18.6% in the third quarter, mainly benefiting from continuous breakthroughs in high-end overseas strategic customers and sample volume laboratories, as well as the volume of seed businesses such as veterinary medicine, minimally invasive surgery, and AED. Looking at overseas market subregions, the European market continued the recovery trend of the first half of this year, with a year-on-year increase of nearly 30% in the third quarter; the developing country market grew 19% in the first three quarters and grew more than 20% in the third quarter. Among them, the Asia-Pacific region represented by India, Indonesia, and Australia grew significantly, reaching 32% in the third quarter. The Latin American region represented by Brazil accelerated markedly in the third quarter, growing by about 25% year on year.

By business line, the life information and support production line fell 11.7% in the first three quarters, the medical imaging production line grew 11.4% in the first three quarters, and the company's in vitro diagnostic production line increased 20.9% in the first three quarters. IVD production line revenue has reached 39% of the company's overall revenue. The revenue volume has already surpassed the life information and support production line, with the chemiluminescence business growing by more than 20%. At present, 8 overseas countries have begun localized production of some in vitro diagnostic products, and have completed coverage in Europe, Latin America, South Asia, Southeast Asia, the Middle East Africa, and the CIS. It is also thanks to this that overseas CUHK sample size laboratories are breaking through at an accelerated pace. In the future, the company will use these overseas production bases to introduce a full line of in vitro diagnostic products, continue to improve the localized operation capabilities required for the consumables business, and continue to enter more medium and large sample volume laboratories to support the rapid long-term growth of international in vitro diagnostic production lines.

Cash flow is good, and dividends continue to be strong

From a cash flow perspective, the net operating cash flow for the first three quarters of 2024 was 11.07 billion yuan, an increase of 42.5% over the previous year. The cash flow is good, which also shows the company's strong competitiveness in the industry.

Following the first mid-term dividend this year, the company continued to respond to regulatory calls, implement shareholder returns, and implement dividends for more than one year. After this third quarter report, the company will distribute a cash dividend of 16.5 yuan for every 10 shares to all shareholders, with a dividend amount of about 2 billion yuan, accounting for more than 65% of net profit returned to mother in the third quarter of this year. Since the A-share listing in 2018, the company has implemented dividends for six consecutive years. As of the end of the third quarter, the total cumulative dividend amount reached 29.72 billion yuan (including 2 billion yuan of shares repurchased), which is 5 times the amount raised in the IPO of 5.93 billion yuan.

Investment advice

We expect the revenue side of the company to achieve 37.928 billion yuan, 45.15 billion yuan, and 53.602 billion yuan (previous value was 40.357 billion yuan, 48.431 billion yuan, 57.878 billion yuan) in 2024-2026, with year-on-year increases of 8.6%, 19.0% and 18.7%, respectively, and net profit to mother is expected to reach 13.03 billion yuan and 15.542 billion yuan in 2024-2026 billion yuan, 18.692 billion yuan (previous value was 13.881 billion yuan, 16.695 billion yuan, 20.216 billion yuan), year-on-year increases were 12.5%, 19.3%, and 20.3%, respectively. The corresponding EPS for 2024-2026 was about 10.75 yuan, 12.82 yuan, and 15.42 yuan, respectively. The corresponding PE valuations were 25 times, 21 times, and 17 times, respectively. Considering the company's strong overall strength and outstanding brand strength, the domestic market maintained steady growth as industry demand recovered, and overseas expansion gradually improved, maintaining a “buy” rating.

Risk warning

the risk of new product development and promotion falling short of expectations;

Risk of international trade friction;

Market competition heightens risk.