Overview of events
On August 25, the company released its semi-annual report for 2022, with operating income of 1.64 billion yuan, an increase of 15.32% over the same period last year, and a net profit of 175 million yuan, an increase of 37.94% over the same period last year, of which Q2 realized operating income of 772 million yuan, an increase of 3.17% over the same period last year, and a net profit of 104 million yuan, an increase of 27.99% over the same period last year and 46.6% month-on-month growth.
Under the control of the epidemic, business at home and abroad has maintained steady development. With the outbreak of the epidemic in Shanghai in April and May this year, the company actively responded to the emergency. Through the advantage of the block industrial pattern of the group, and relying on the linkage and complementarity of the three major production bases of Zhejiang, Guangdong and Guangxi, the stability of the supply chain was ensured. In the first half of 2022, domestic business increased by 15.75% compared with the same period last year, while overseas business increased by 13.87%. At the same time, we believe that with the upgrading of product structure and reasonable cost control, the company has achieved a net interest rate of 13.78%, an increase of 0.93pct over the same period last year, and a further improvement in profitability.
The business of Ouwen & Medical Beauty in Guangxi is developing rapidly. The company owns 49% of the subsidiary Guangxi Ouwen Medical Technology Group Co., Ltd. Guangxi Ouwen is famous for its "full range of products and wide channels" in the industry. it mainly involves in in vitro diagnosis, medical equipment, orthopaedics and many other products. In the first half of 2022, the operating income was 585 million yuan, an increase of 30.55% over the same period last year, and a net profit of 50.5117 million yuan, an increase of 105.53%. In addition, the company has completed 22.8609 million yuan in medical and beauty business, which is expected to be mainly approved disposable injection kits for injecting modified sodium hyaluronate gel products into dermis tissue for facial filling. in the future, ultra-fine injection needles, hair follicle transplantation devices, multi-head water light needles and other products of medical and beauty devices will be declared and landed one after another to build a rich line barrier of compliant medical and beauty products.
The cost control is reasonable, and the variety of products is abundant. Under the background of severe epidemic situation, the company Q2 actively controlled various expenses and achieved an overall expenditure rate of 18.8%, which was lower than that of Q1 by 2.2pct, but still attached great importance to R & D investment. The R & D expenditure rate reached 4.5%, which was higher than that of Q1. In the first half of 2022, the company and its subsidiaries invested a total of 71.7979 million yuan in product research and development, accounting for 4.38% of operating income. And upgrade and iteration the products such as biopsy needle, washing needle, dental needle, safety indwelling needle, blood collection needle and so on. Disposable pump syringes, new infusion needle type safety indwelling needles, automatic biopsy needles and other products have completed clinical trials and submitted registration application materials; disposable visible blood collection needles have completed evaluation; disposable injection pen needles have obtained registration certificate. In the first half of 2022, the company and its subsidiaries completed the first registration of 4 products and the renewal of registration of 6 products. As of the semi-annual report, the company and its subsidiaries have a total of 104 registration certificates, and the variety of products continues to be rich.
Investment suggestion
We estimate that in 2022-24, the company will achieve a home net profit of RMB 3.91 million, an increase of 34.3%, 24.2%, 22.8%, corresponding to an EPS of 0.89, 1.10, 1.35, and a PE valuation of 19.62, 15.80, 12.86 times for the year 22-24. The company passed the epidemic smoothly in the first half of 2022, and its business performance is expected to improve in the second half of the year, including the recovery of hospital diagnosis and treatment, the recovery of offline consumption and the continuous development of national collection and mining. We continue to be optimistic about the upgrading and expansion of the infusion puncture industry. As an industry leader, the company is expected to enjoy the dividend of industry expansion and upgrading by virtue of integrated industrial chain, lower cost advantages and continuous product innovation. At the same time, with the help of the industrial layout to extend the tentacles to the high-growth subdivision track, the company is expected to further consolidate its own moat and enhance the performance ceiling. Maintain a "buy" rating.
Risk hint
Risks such as lower-than-expected collection, changes in epidemic situation, changes in overseas international situation, etc.
