Zhende Medical(603301) 国信证券·2024-09-13 10:04Investment Rating - The report maintains an "Outperform" rating for ZhenDe Medical (603301 SH) [1][3][9] Core Views - A performance inflection point emerged in Q2 2024, with domestic business showing strong growth [1][4] - H1 2024 revenue was RMB 2 042 billion (-11 44%), net profit attributable to parent company was RMB 161 million (-32 13%), and non-GAAP net profit was RMB 162 million (-27 57%) [1][4] - Q2 2024 revenue was RMB 1 079 billion (+7 25%), net profit attributable to parent company was RMB 88 million (-3 51%), and non-GAAP net profit was RMB 87 million (+5 75%) [1][4] - Conventional business showed sequential improvement, with overseas, domestic hospital, and retail segments all achieving positive growth [1][4] - Gross margin increased slightly to 35 41% (+0 68pp) in H1 2024, while expense ratio rose to 24 14% (+1 24pp) [1][6] Business Performance - Excluding isolation and protective products, conventional business revenue in H1 2024 was RMB 1 953 billion (+7 53%), with Q2 2024 revenue at RMB 1 040 billion (+11 85%) [1][4] - Overseas conventional business revenue in H1 2024 was RMB 1 139 billion (+0 68%), domestic hospital line revenue was RMB 502 million (+17 69%), and domestic retail line revenue was RMB 278 million (+26 82%) [1][4] - Modern wound care and surgical infection control businesses contributed to improved gross margin [1][6] - Ostomy and modern wound care business grew 31 7% in H1 2024, with revenue reaching RMB 331 million [7] Financial Forecasts - Revenue forecasts for 2024-2026 are adjusted to RMB 4 5/5 27/6 17 billion (previously RMB 4 6/5 45/6 39 billion) [1][8] - Net profit attributable to parent company for 2024-2026 is projected at RMB 400/520/650 million (previously RMB 410/520/670 million) [1][8] - EPS for 2024-2026 is estimated at RMB 1 52/1 97/2 43 [8][9] - Current PE ratios are 14/10/8x for 2024-2026 [1][9] Industry and Market Context - The company faces challenges from domestic industry consolidation affecting new product hospital entry and overseas destocking [1][8] - The medical device sector shows potential for growth, particularly in wound care and infection control segments [1][7]