Performance is gradually picking up, and the impact of collection is expected to gradually clear up
In the first three quarters of 2023, the company achieved revenue of 792 million yuan, an increase of 4.24% over the previous year; net profit after deducting non-returned net profit of 162 million yuan, a year-on-year decrease of 10.94%. Benefiting from the continuous increase in penetration in the context of collection, the company's product sales volume increased significantly.
In the third quarter, the company achieved revenue of 251 million yuan, up 33.34% year on year; net profit after deducting non-return net profit of 51 million yuan, up 106.11% year on year; and operating cash flow of 53 million yuan, up 924.95% year on year. On the cost side, the company's sales expense ratio, management expense ratio, and financial expense ratio for the first three quarters were 29.51%/3.65%/-1.08% respectively, maintaining a stable level.
Product layout has accelerated and enriched, and long-term growth momentum is strong
Based on the advantageous fields of orthopedic consumables, the company continues to increase investment in R&D and expand the layout of high-end medical consumables. In the first three quarters of 2023, the company invested 115 million yuan in R&D, an increase of 9.26% over the previous year; the R&D expenditure rate reached 14.49%, an increase of 0.98 pct over the beginning of the year. From January 1 to July 27, 2023, the company's product reserves have been enriched at an accelerated pace, adding medical device registration certificates or registration certificates for 29 products, including 3 joint product registration certificates such as knee bone cement molds, 4 spinal product registration certificates including additive manufacturing intervertebral fusion devices, 2 sports medicine registration certificates including meniscus repair systems, 6 sports medicine registration certificates including orthopedic locators, and 5 dental registration certificates including 3D printed maxillofacial osteotomy guides. At present, the company's business covers various sectors such as joints, spine, sports medicine, dentistry, PRP, etc., and is expected to continue to contribute to marginal performance growth.
Sports medicine has broad prospects, and the implementation of sports medicine is expected to accelerate domestic replacement. Since the company officially entered the field of sports medicine in 2019, the company's sports medicine product line has become more and more complete. It has many sports medicine registration certificates such as meniscus repair systems, arthroscopic catheters, and PEEK material cable anchors, etc., and has now basically completed its layout in the field of sports medicine. The field of sports medicine has broad prospects, and domestic sports medicine is in the early stages of development. With the publication of the “Notice on Centralized Procurement of Intraocular Crystals and Sports Medicine Medical Consumables by the State (No. 1)” in September 2023, the national recruitment of sports medicine was officially launched, which is expected to accelerate the domestic replacement process in the field of sports medicine. As a leading orthopedic enterprise in China, the company is expected to benefit from the implementation of policies and the rapid release of sports medicine products.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 12.58, 15.96, and 2,027 billion yuan, EPS is 0.72, 0.96, and 1.23 yuan respectively, and the current stock price corresponding to PE is 37.3, 28.1, and 21.9 times, respectively. The company is a leading enterprise in the orthopedic field, with outstanding product quality and strong innovation. It is optimistic about the increase in market share and new product launch of the company under the normalization of collection policies, and maintain the “buy” investment rating.
Risk warning
New product promotion falls short of expectations, collection impact exceeds expectations, risk of further decline in product prices, increased market competition, rising raw material costs, industry policy and regulatory risks