Incidents:
On April 30, 2024, Weigao Orthopedic released its report for the first quarter of 2024: in the first quarter of 2024, the company achieved revenue of 348 million yuan, a year-on-year decrease of 10.74%; realized net profit of 35 million yuan, a year-on-year decrease of 62.92%; and realized net profit without deduction of 35 million yuan, a year-on-year decrease of 62.03%.
Investment highlights:
Focus on orthopedic circuits, optimize product structures, and expand fields of innovation. Based on the product layout of multiple brands and production lines, the company continuously optimizes the product structure, consolidates segmented production lines such as sports medicine and bone repair materials, and explores the layout of fields such as neurosurgery, orthopedic rehabilitation, minimally invasive orthopedics, and digital orthopedics.
The entire sports medicine production line has obtained evidence to form an overall solution, providing a new growth point for the company's development; research and development of orthopedic materials such as novel bone cement, joint ceramics, reinforced PEEK, and tantalum metal have all made breakthroughs; surgical supplements and layout improvements in new fields such as orthopedic endoscopy, minimally invasive surgery equipment, 3D printing, neurosurgery, etc.; actively expanding PRP product indications in the field of tissue repair, with remarkable results in clinical application coverage.
Lean production has been digitally transformed and upgraded, and operational efficiency has improved markedly. The company focuses on the two major work priorities of lean production and PSI production, sales and storage planning around the long-term strategy of “digital factory” and the main line of “production by sales and rapid delivery”. In terms of lean production, guided by indicators such as 5S, quality, cost, delivery, and efficiency, projects such as lean workshop 1.0 pilot, equipment management system, NPI new product introduction, flexible production, and VSM improvement week are carried out to promote continuous optimization of organizational structures and work processes, and employee literacy, production efficiency and product quality have improved markedly. In terms of PSI production, marketing and storage planning, it integrates functions such as production, supply, sales, research, finance, and storage to improve closed-loop control of demand management, delivery commitments, and planned production scheduling. Strengthen rigid execution, adjust resource allocation, and ensure controllable delivery. Through replication promotion, the production cycle was reduced by 30%.
Profit forecasts and investment ratings. We expect the company's revenue in 2024-2026 to be 1,515, 17.42, and 1,968 million yuan, net profit to mother of 249, 2.98, and 353 million yuan, corresponding PE of 41.04x, 34.34x, and 28.97x. As the company continues to focus on its core business, its innovative strength is gradually strengthened, its product coverage is gradually comprehensive, the drive for endogenous growth is continuously strengthened, and the “gain” rating is maintained.
Risk warning. There is a risk of price reduction in collection, the release of new products falling short of expectations, R&D progress falling short of expectations, sales falling short of expectations in the European and American markets, and the risk of changes in industry policies.