Moving forward, 1H24's performance continued to grow steadily under the influence of external industry factors. The company 1H24 achieved revenue/net profit of 5.333/0.95 billion yuan (yoy +1.2%/+1.3%). Against the backdrop of market wait-and-see sentiment before the implementation of domestic medical industry rectification and equipment renewal policies, overall performance still achieved steady growth. We maintain our profit forecast and expect the company's 24-26 EPS to be 2.87/3.47/4.22 yuan. The company is a leader in the domestic medical imaging field. Product competitiveness continues to improve and global promotion continues to gain strength. We gave the company 53x PE for 24 years (comparable company Wind had a consistent expected average of 43x), kept the target price unchanged at 152.37 yuan, and maintained a “buy” rating.

Gross profit margin is rising steadily, and investment in commercialization continues to be strengthened

The company's 1H24 gross margin is 50.4% (yoy+1.7pct). The company's high-end products continue to work hard to reduce costs and increase efficiency, helping the gross margin level to rise steadily. The company's 1H24 sales/management/R&D expense ratio is 16.7%/4.5%/15.5% (yoy+1.1/-0.2/-1.3pct), respectively. The company continues to strengthen its commercialization capabilities and further improve its global sales network layout.

Sales of equipment products showed an upward trend throughout the year, and the share of maintenance service revenue continued to increase 1) Equipment products: revenue of 4.544 billion yuan (yoy -1.8%). Among them, RT, MI, and MR products had outstanding promotion performance, with revenue yoy +188.1%/+19.1%/+12.2%, respectively. Considering the optimization of domestic configuration certificate management and the continuous advancement of equipment renewal policies, and the continuous increase in product recognition in overseas markets, I am optimistic about the upward development trend of the sector in '24. 2) Maintenance services: Revenue of 0.617 billion yuan (yoy +23.8%), accounting for 11.6% of revenue (yoy+2.1pct), further improving performance contribution. Considering the continuous increase in the company's global equipment installed capacity (as of 1H24, the company's global equipment installation has exceeded 20,000 units/set) and the further improvement of the after-sales team, we are optimistic that the sector's revenue will grow rapidly in '24.

Optimistic that the company's domestic and overseas business will achieve positive development in 24 years

1) Domestic: Revenue of 4.401 billion yuan (yoy -3.4%). We estimate that market wait-and-see sentiment before the implementation of domestic medical industry restructuring and equipment renewal policies will affect the pace of in-hospital medical equipment procurement. The market recognition of the company's products continues to increase. According to the new market value statistics, 1H24 Company ranked first in the country in terms of market share of products such as 64-80 row CT, MR of 3.0T or above, and PET/CT. Looking ahead to the full year, we are optimistic that domestic revenue will achieve steady growth in the context of continued implementation of favorable policies such as configuration management optimization and equipment renewal; 2) Overseas: revenue of 0.933 billion yuan (yoy +29.9%), with development in Asia Pacific, North America, and emerging markets breaking ground. Looking ahead to the full year, considering the continued increase in the company's brand recognition, combined with continued breakthroughs in overseas high-end customer cooperation, we are optimistic that overseas revenue will continue to grow rapidly throughout the year.

Risk warning: Sales of core products fall short of expectations, increased market competition, and loss of core technical personnel.