Incident: On the evening of April 25, 2024, the company released its report for the first quarter of 2024: operating income of 455 million yuan, up 30.20% year on year, mainly due to the company actively expanding domestic and foreign markets and further improving product coverage; net profit to mother of 140 million yuan, up 36.48% year on year; deducted non-net profit of 137 million yuan, up 51.59% year on year, mainly due to the increase in the company's sales scale, profit increase due to cost reduction and fee control, and reduction in non-recurring profit and loss; net cash flow from operating activities was 115 million yuan, year on year Reduced by 1.51%.

The volume of 3D electrophysiology surgeries is growing strongly, and new vascular intervention products are emerging (1) Electrophysiology business: In 2023, the company completed more than 10,000 3D electrophysiology surgeries. The number of surgeries increased by more than 200% compared to 2022, and continued to expand in the first quarter of 2024 under the positive influence of volume procurement. The research project pulse ablation catheter, pulse ablation instrument, high density measurement catheter, and pressure ablation catheter is expected to be approved in the first quarter of 2025. (2) Vascular interventional business: In April 2024, thoracic aortic laminar stents were approved by NMPA and are suitable for intracavitary interventional treatment of Stanford type B aortic dissection. Implantable products such as venous filters and spring rings in the research project have entered the registration and repair stage, and carotid artery stents and TIP laminating stents have entered clinical trials. The company continues to enrich its product line and create new growth points by investing in Hunan Eweidi (urinary, reproductive, digestive, etc.) and Shenzhen Haoying Medical (IVUS, etc.).

Profitability analysis, the expense ratio was well controlled, and the net interest rate increased slightly in the first quarter of 2024. The company's comprehensive gross profit margin, sales expense ratio, management expense ratio, R&D expense ratio, financial expense ratio, and overall net interest rate were 72.01%, 19.29%, 5.33%, 14.41%, -0.54%, and 30.28%, respectively, with changes of +1.35pct, -0.50pct, +0.22pct, -0.63pct, -0.82pct, and +2.03pct, respectively.

Profit forecast and investment rating: We expect the company's revenue for 2024-2026 to be 2,223 billion/3.08 billion yuan, respectively, with year-on-year growth rates of 35%/35%/32%; net profit to mother of 689 million/934 million yuan/1,237 million yuan, respectively, up 29%/36%/32%; EPS will be 10.30 /13.97 /18.50, respectively, corresponding to 42 times PE in 2024 according to the closing price on April 25, 2024. Maintain a “buy” rating.

Risk warning: New product development failure and registration risk, risk of loss of talent in research and management, risk of market competition, risk of falling product prices due to industry policies, etc.