Weigao Orthopaedic(688161) 东方证券·2024-09-11 02:13Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 23.56 CNY based on a 38 times price-to-earnings ratio for 2024 [2][5]. Core Insights - The company's performance is showing a significant improvement, with a recovery in revenue and profit margins expected to continue in the second half of the year [1][2]. - The impact of centralized procurement is gradually diminishing, leading to improved operational metrics across major product lines [1]. - The company has successfully increased its market share and sales volume in key segments, including spinal, trauma, and joint products [1]. Financial Summary - In H1 2024, the company achieved revenue of 751 million CNY, a year-on-year increase of 6.8%, while net profit attributable to shareholders was 93 million CNY, down 16.7% year-on-year [1]. - For Q2 2024, revenue reached 403 million CNY, a year-on-year decrease of 3.1% but a quarter-on-quarter increase of 15.7%, with net profit of 58 million CNY, reflecting a year-on-year increase of 230.5% and a quarter-on-quarter increase of 66.8% [1]. - The company's operating cash flow for H1 2024 was 145 million CNY, a significant increase of 148.5% year-on-year, primarily due to tax refunds and reduced tax payments [1]. Product Line Performance - The spinal product line generated 220 million CNY in revenue in H1 2024, with Q2 revenue increasing by 12% quarter-on-quarter [1]. - The trauma product line achieved 120 million CNY in revenue, with Q2 revenue up 33% quarter-on-quarter [1]. - The joint product line saw revenue of 230 million CNY in H1 2024, with a year-on-year increase in surgical volume of 21% and sales volume of 22% [1]. Profitability Metrics - The company's gross margin for H1 2024 was 64.1%, down 7.2 percentage points year-on-year, while the net margin was 12.8%, down 1.0 percentage point year-on-year [1]. - In Q2 2024, the gross margin improved to 68.1%, up 8.6 percentage points quarter-on-quarter, and the net margin increased to 15.0%, up 4.7 percentage points quarter-on-quarter [1].