Profit under pressure in 2024, international business leads growth, maintain "buy" rating The

company will achieve revenue of 750 million (+10.54%) in 2024, net profit attributable to the parent company of 21 million (-63.68%), non-net profit of -06 million (-114.13%), and net operating cash flow of -79 million (yoy-311.01%). On the expense side, the R&D expense rate was 21.83% (+0.15pct), the management expense rate was 14.48% (+1.08pct), and the sales expense rate was 33.38% (-0.89pct). By region, the domestic main business income was 586 million yuan (YOY+3.93%), and the overseas revenue was 161 million yuan (YOY+42.70%), with overseas business leading the growth, and product access and market promotion in many countries were progressing smoothly. Considering the disturbance of industry policies and the pace of recruitment on sales and gross profit margin, we have lowered the profit forecast for 2025-2026 and added a profit forecast for 2027, and it is expected that the net profit attributable to the parent company in 2025-2027 will be 0.84/1.31/200 million yuan (original value of 177/285 million yuan), EPS will be 0.63/0.97/1.49 yuan, and the corresponding PE of the current stock price will be 65.8/42.8/27.9 times, respectively, but the bidding is expected to resume in 2025. With the advantages of the company's product line and the expansion of market channels, the domestic market is expected to increase and the international business will maintain high growth, so it maintains a "buy" rating.

In 2024, the installation of AQ300-4K ultra-high-definition system tertiary hospitals will be accelerated, and new products will be released one after another

In 2024, the revenue of endoscope equipment will be 714 million (+14.72%), and the gross profit margin will be 68.78% (-2.66pct), the revenue of endoscopic diagnosis and treatment consumables will be 21 million (-50.63%), and the gross profit margin will be 45.88% (-2.02pct), and the revenue of endoscope maintenance services will be 13 million (+3.31%). Gross margin was 72.64% (+10.98 pct). Among them, the sales volume of the company's mid-to-high-end products has increased steadily, and the number of mid-to-high-end models and mirror bodies installed in tertiary hospitals (including winning bids) is 137 units and 522 respectively, and 116 have entered tertiary hospitals. The company has made a lot of R&D achievements, added 22 invention patents, and successively released hyperspectral platform, AQ-150, AQ-120 and other endoscopic systems, 640x cell endoscope, 140x optical magnification endoscope, electronic percutaneous choledoscope, electronic cystoscope, electronic ureteronephroscopy, ultra-fine gastroscope, etc., which further enriched the company's product line, improved the coverage of departments, and laid the foundation for the company's continuous improvement of market share in the flexible endoscopy industry.

R&D casts the core competitiveness of products, and market promotion changes help

long-term stable growth of performance Through years of technology research and development, the company has created a full range of products from AC-1 to AQ300 low, medium and high-end, and innovatively launched 4K ultra-high-definition, split, wireless power supply, laser signal transmission, radio frequency card identification and other functions with differentiated competitive advantages, continuously improved durability, operability and other performance, and improved variable hardness, optical magnification, fine mirror and other mirror bodies. It is actively developing 3D flexible endoscopy and AI diagnosis and treatment technology and endoscopic robots, which are expected to be applied in the new generation of products in the future and continue to improve safety, reliability and convenience, create a multi-functional comprehensive flexible endoscope equipment that meets various clinical needs, and accelerate the localization and substitution process of flexible endoscope equipment. Through the "Aohua Cup" CBI National Case Competition, digestive endoscopy technology hand-in-hand training courses and participation in academic conferences around the world, the company has enhanced the company's brand recognition at home and abroad and increased customer stickiness.

Risk warning: the risk of industry policy changes, product promotion is less than expected, and foreign exchange risk.