Incident: Recently, the company released its report for the third quarter of 2024: operating income of 0.362 billion yuan in the first three quarters of 2024, a year-on-year decrease of 9.85%; net profit to mother was 0.098 billion yuan, a year-on-year decrease of 30.42%; net profit after deducting non-return to mother was 0.089 billion yuan, a year-on-year decrease of 33.86%.

Among them, revenue for the third quarter of 2024 was 0.115 billion yuan, up 8.79% year on year; net profit to mother was 0.017 billion yuan, down 42.09% year on year; net profit after deducting non-return to mother was 0.015 billion yuan, down 39.13% year on year. The lower profit growth rate than the revenue growth rate is mainly affected by the increase in sales expense ratio and financial expense ratio.

Adhere to technological innovation and continue to explore ultrasound applications

The company has always adhered to the development strategy of independent research and development and continuous innovation, and is deeply involved in the field of ultrasound. Based on a deep understanding of the underlying ultrasonic technology, the company continues to introduce new products and improve product performance. In the first three quarters of 2024, the company launched the SonoFamily series of products with a new major integration, which consists of a comprehensive range of innovative solutions, including high-end trolley-type ultrasound xBIT, high-end desktop ultrasound SonoMax, high-end lightweight notebook ultrasound SonoAir, and small smart handheld ultrasound SonoEye.

Furthermore, the company continues to explore the field of ultrasound applications. For example: (1) The company actively explores the application of ultrasound-guided vascular catheterization, not only reached a strategic cooperation with BD to create an overall solution in the field of vascular access, but also actively participated in the Beijing “Peripheral Intravenous Infusion Treatment Risk Prevention and Control Academic Conference” to enable new routes of intravenous treatment; (2) As a modern medical imaging device, ultrasound can also be used for traditional Chinese medicine treatment, using visual acupuncture as an example, to help doctors accurately locate the lesion area to achieve accurate treatment with little trauma, fast recovery, and remarkable curative effect; (3) In the field of ultrasound medicine and aesthetics, Not only can it be accurate Diagnosing skin and soft tissue problems can also provide safe, non-invasive treatment options, thereby bringing new development opportunities to the medical and aesthetic industry.

Issuing an equity incentive plan, demonstrating strong confidence in performance growth

On October 1, the company announced the 2024 Restricted Stock Incentive Plan (draft). It plans to grant 0.593 million shares of restricted stock (accounting for about 0.53% of the company's total share capital on the day of the announcement) to the incentive target at a price of 13.50 yuan/share. The incentive plan aims to motivate a total of 32 people, including middle management, technical leaders, and business leaders. The company-level assessment index (100% ownership coefficient) is as follows: The company's gross profit for 2024/2025/2026 was 0.3/0.345/0.4 billion yuan, respectively, demonstrating the company's confidence in the long-term development of overall and key businesses.

The cost side continues to invest, and the profit side is temporarily under pressure

In the first three quarters of 2024, the company's comprehensive gross margin fell 1.02pct year on year to 59.15%. The sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 10.90%, 7.50%, 17.05%, and -3.88%, respectively. The year-on-year changes were +1.57pct, +1.62pct, +2.38pct, and +2.49pct, respectively. Under the combined influence, the company's overall net interest rate fell 8.03pct year-on-year to 27.17%.

Among them, the comprehensive gross profit margin, sales expense ratio, management expense ratio, financial expense ratio, and overall net interest rate for the third quarter of 2024 were 57.14%, 12.40%, 7.33%, 19.78%, 4.65%, and 14.88%, respectively, with changes of -2.83pct, +3.16pct, +0.83pct, -0.41pct, +3.95pct, and -13.07pct, respectively. Among them, the change in the sales expense ratio is mainly due to the company's speeding up the construction of the marketing system, leading to an increase in personnel costs and rent; the change in the financial expense ratio is mainly due to large fluctuations in the US dollar exchange rate resulting in exchange losses.

Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be 0.509 billion/0.616 billion/0.709 billion yuan, with year-on-year growth rates of 5%/21%/15%, respectively; net profit to mother is 0.137 billion/ 0.169 billion/0.205 billion yuan, respectively; growth of -6%/23%/21%, respectively; EPS is 1.22/1.51 /1.83, respectively, according to The closing price on November 11, 2024 corresponds to 22x PE in 2024. Maintain a “buy” rating.

Risk warning: risk of customer development falling short of expectations, risk of equipment bidding progress falling short of expectations, risk of fluctuations in overseas markets, risk of exchange rate fluctuations.