Key points of investment:

Incident: The company released its 2024 three-quarter report. The third quarter of 2024 achieved revenue of 0.267 billion (+6.4%), net profit of 85.54 million (+21.51%), net profit of 80.09 million (+29.01%); achieved revenue of 0.857 billion (+5.89%) in the first three quarters of 2024, net profit of 0.257 billion yuan (+25.62%), net profit of 0.243 billion (+29.11%).

The revenue side grew steadily, and gross margin continued to rise. In Q3 alone, the company achieved steady growth on the profit side, achieving revenue of 0.267 billion (+6.4%) in the third quarter and net profit of 85.54 million (+21.50%) to mother.

At the same time, benefiting from product structure optimization, Q3 gross margin was further increased to 70%. On the cost side, the sales expense ratio fell to 14.3%, -9.2pct year on year. Expense side optimization is expected to drive continuous improvement in profitability.

IVD is growing rapidly, and clinical care is being pressured by the high base rate during the same period. By business, in the first three quarters of 2024, in vitro diagnosis business revenue was 0.678 billion yuan, up 19% year on year. Among them, domestic in vitro diagnostic business revenue was 0.442 billion yuan, up 15% year on year; international in vitro diagnostic business revenue was 0.237 billion yuan, up 26% year on year. In the field of treatment and rehabilitation, the clinical medical business still had some negative growth in the first three quarters of 2024 due to its high revenue base in the first half of 2023; the dermatology and aesthetic business grew 8% year on year; and the consumer health business is currently small, up 24% year on year.

The light-emitting assembly line has been promoted, and the international market is gaining strength simultaneously, and it is expected that it will continue to open up room for growth.

In terms of domestic electrochemiluminescence business, the company began promoting a series of assembly line products in the third quarter of this year. As the assembly line is installed, it is expected to boost sales of reagent products. At the same time, on the international side, on the one hand, the company is further improving product models on the product side, supplementing medium speed models, and at the same time accelerating the international registration of luminescence reagent projects to enhance the competitiveness of the company's luminescence products in the international market; on the other hand, it is continuously strengthening and improving the professional capacity building of the international marketing team. International market expansion+domestic assembly line promotion is expected to continue to open up room for the company's growth.

Profit forecast and valuation: Considering that the company's clinical care was affected by the growth rate of the high base during the same period, we adjusted our previous profit forecast. The company's revenue for 2024-2026 was 1.33/1.71/2.18 billion yuan, respectively, up 16%, 28% year-on-year (previous value was 1.4/1.79/2.29 billion yuan); net profit to mother was 0.4/0.51/0.66 billion yuan, respectively, up 22%, 27%, and 28% year-on-year (previous value was 0.42/0.54/ 0.69 billion yuan), maintaining a “buy” rating.

Risk warning

Risk of winning bids in the IVD sector falling short of expectations, risk of worsening competitive patterns in the medical aesthetic and IVD industries, risk of falling short of expectations in the promotion of medical and aesthetic products