occurrences
On August 22, 2023, the company released the 2023 semi-annual report. During the reporting period, the company achieved operating income of 317 million yuan, an increase of 51.82% over the previous year; net profit of 91.78 million yuan, an increase of 156.79% over the previous year; net profit of 82.16 million yuan after deducting non-net profit of 82.16 million yuan, an increase of 230.33% over the previous year. 23Q2 achieved operating income of 159 million yuan, up 43.27% year on year; net profit of 41.76 million yuan, up 59.66% year on year; net profit after deducting non-net profit of 37.77 million yuan, up 67.68% year on year.
Demand for the replacement of childcare equipment surged, with a year-on-year increase of 64.4% in the first half of the year. The company is the leader in the domestic infant care business, with a domestic market share of more than 50%. Currently, products are gradually entering the third-generation level, and some products under development have reached the fourth-generation level. Thanks to the continuation of the interest-rate loan policy in October 2022, the iterative demand for upgrading childcare equipment in medical institutions surged. The volume and price of the company's 23H1 childcare products rose sharply, and the company's childcare business (infant incubators, radiation warmers, jaundice treatment tables, and other products) achieved revenue of 188 million yuan, an increase of 64.4% over the previous year.
Driven by “technology+market”, collection and implementation help the stapler business accelerate growth. Under the trend of minimally invasive surgery, electric staplers have become the fastest growing segment of the stapler market in China. With years of technology accumulation, the subsidiary Wellcaidi has achieved the first certification of domestic production of electric staplers, and is the leading electric stapler in China. During the reporting period, the company achieved stapler revenue of 123 million yuan, an increase of 35.77% over the previous year, of which the electric stapler business accounted for more than 80%. The company won the bid for all departments in the Fujian Alliance Collection. As various provinces start execution one after another, the stapler business is expected to usher in rapid expansion, and the market share is expected to increase further.
Increase investment in R&D and continue to innovate to create core competition
The company continues to increase investment in R&D and promote product development and registration. The company spent 17.11 million yuan on R&D expenses of 23H1, an increase of 3.13% over the previous year, accounting for 5.39% of revenue. During the reporting period, the company and its subsidiaries continued to advance a total of 23 infant care and stapler projects, added 8 new medical device registration certificates, obtained 3 authorized patents, and obtained a total of 230 valid patents.
Investment advice: Maintaining a “buy” rating
We expect the company's total operating revenue in 2023-2025 to reach 792/10.77/1,408 million yuan, up 56.4%/36.1%/30.7% year on year; return net profit of 1.90/2.70/376 million yuan, up 94.7%/42.1%/39.0% year on year; the corresponding EPS for 2023-2025 is 0.66/0.94/1.30 yuan, respectively, and the corresponding PE multiples are 23x/16x/11x, respectively. Considering the benefits of collecting the company's core products, as a domestic electric stapler leader, the concentration is expected to increase further.
Maintain a “buy” rating.
Risk warning
Product commercialization falls short of expectations risks, increased competition risks, and policy risks.