Key points of investment:
Affected by factors such as the epidemic, the company's 2022 performance fell short of expectations. In 2022, the company achieved operating income of 2,491 million yuan, a year-on-year decrease of 6.88%, net profit of 890 million yuan, a year-on-year decrease of 25.67%, after deducting net profit of 822 million yuan from the same period last year, a decrease of 27.65% over the same period last year. The company was affected by factors such as the pandemic in 2022, and its performance fell short of expectations.
Critical care and equipment grew better: in 2022, the company's domestic revenue for critical illness (HA330, HA380 and CA series) was 229 million yuan, up 32.47% year on year, of which HA380 was 140 million yuan, up 112.48% year on year; DX-10 blood purifiers achieved sales revenue of 186 million yuan, an increase of 181.79% over the same period last year; affected by the decline in overseas critical care demand, the company's overseas revenue was 62.49 million yuan, a year-on-year decrease of 51%.
Announcing the new phase of the shareholding plan: The company released the “Company Struggler 1 Employee Stock Ownership Plan (Draft)”. The number of shares planned to be held this time is about 4.904 million shares, accounting for 0.61% of the company's share capital. No more than 110 people participated, including Tang Xianmin, the company's deputy general manager. The performance assessment year is 2023-2027 (5 years), divided into two vesting periods (50% each). The performance assessment requirement for the first vesting period (2023 to 2025) is “cumulative net profit reaching 3.6 billion yuan”, and the second vesting period assessment requirement is “cumulative net profit reaching 7 billion yuan from 2023 to 2027”.
Maintain the “buy” rating: The company's new employee stock ownership plan, core employee interests are tied to the company for a long time, and the three-year/five-year cumulative profit assessment method avoids employee shortsightedness. We are optimistic that after the pandemic, the company will re-enter a steady growth channel as demand recovers and domestic and overseas market activity normalizes. Considering changes in the industry's growth rate and taking into account the company's shareholding plan assessment goals, we lowered the company's profit forecasts for 2023 and 2024, and gave a profit forecast for 2025 for the first time. The company's net profit for 2023-2025 is estimated to be 1,097 million yuan (the previous forecast was 1,782 billion yuan), 1,323 million yuan (the previous forecast was 2,323 million yuan) and 1,616 million yuan respectively. The corresponding PE is 22X, 18X, and 15X respectively. Considering that the company's performance fell short of expectations, the stock price has dropped a lot (about 40% since the end of October last year), and the current valuation level is low (Shenwan's medical device sector 2023E is 27 times), so it maintains its “buy” rating.
Risk warning: collection price reduction risk, increased competition risk, R&D risk