Event: according to the company's semi-annual report for 2023, 23H1 achieved revenue of 816 million yuan, an increase of 14.65% over the same period last year; net profit of 241 million yuan, up 48.34% over the same period last year; and 239 million yuan of non-return net profit, an increase of 53.42% over the same period last year.

Comments:

The company's 23H1 performance recovered significantly, and the company's net profit increased significantly: the company's 2023H1 realized revenue of 816 million yuan (YOY+14.65%) and net profit of 241 million yuan (YOY+48.34%), of which 23Q2's net profit was 131 million yuan, an increase of 101.65% over the same period last year. The company's 23H1 in vitro testing reagent revenue of 419 million yuan (YOY+18.29%), revenue showed a restorative growth, mainly due to the resumption of normal operation of medical institutions across the country to increase the demand for routine testing. 23H1's gross profit margin increased by 1.84pp to 74.58% compared with the same period last year; the sales expense rate decreased by 1.44pp to 21.35%; the management expense rate decreased by 1.68pp to 6.63%; and the financial expense rate decreased by 0.56pp to 2.86% year-on-year. During the period, the expense rate fell 3.62pp to 40.005% compared with the same period last year, driving the company's profitability to further enhance.

R & D investment continues to increase, collection and mining is expected to achieve product volume: in vitro diagnosis is a technology-intensive industry, the company's 23H1 R & D expenditure of 74.8145 million yuan, an increase of 15.27% over the same period last year. As of June 30, 2023, the company has 283 medical device registration certificates, 379 medical device filing certificates, 96 CE certification and 187patents. The company has been selected from the 25 projects participated in the collection of liver function biochemical testing reagents by the inter-provincial alliance, and the six coagulation items of subsidiary Meituang Xinyue have all won the bid in Anhui collection, which is expected to increase the concentration of the industry. as the top nine creatures of the head company are expected to achieve further production.

Sinopharm increased its holdings and promoted its long-term growth: Sinopharm's investment became the company's largest shareholder in 2020, and continued progress in 2023 in the secondary market. Sinopharm Investment is a wholly owned subsidiary of Sinopharm Group. In the future, the company will continue to give full play to the channel synergy with Sinopharm Group and the advantages of M & A cooperation with Sinopharmaceutical Investment to accelerate the growth of the company. Recently, Mindray Medical has signed a strategic cooperation agreement with the top nine organisms, and it is expected that in the future, the two sides will carry out all-round strategic cooperation in R & D, production, manufacturing and sales, so as to empower the company's long-term growth.

Profit forecast, valuation and rating: we believe that the company will continue to benefit from post-epidemic repair, and are optimistic about the continued empowerment of Chinese drugs. We maintain the company's home net profit forecast of RMB 522 million in 2023-2025, with the current price corresponding to 23-25 PE times as much as 21-17-13, and maintain the company's "buy" rating.

Risk hints: the risk of higher-than-expected price reduction, the risk of change in sales model, the risk that the progress of new product R & D and listing is less than expected, and the risk of stock price instability caused by violations.