MicroPort EP(688351)2024-10-29 03:31Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 27.90, indicating a potential upside of approximately 30% from the current price of RMB 21.46 [2][6]. Core Insights - The company's revenue in Q3 2024 experienced a slight decline of 1.5% year-on-year to RMB 92.5 million, primarily due to pressures in the domestic market. However, net profit saw a significant increase of 164% year-on-year to RMB 24.71 million, attributed to effective cost control measures [2][3]. - The company aims for a 30% year-on-year revenue growth in 2024, although the report adopts a more conservative forecast due to ongoing pressures in surgical volume growth amid industry anti-corruption measures [2][3]. Summary by Sections Financial Performance - Q3 2024 revenue decreased by 1.5% to RMB 92.5 million, with the revenue composition being over 40% from three-dimensional ablation catheters, approximately 30% from mapping catheters, about 10% from devices, and around 15% from sheath products. New products accounted for 30% of revenue, up from 20% in the first half of 2024 [3]. - Gross margin fell by 4.3 percentage points to 58.1%, impacted by centralized procurement price reductions and the ramp-up phase of new products [3]. - For the first nine months of 2024, revenue, gross margin, and net profit increased by 23%, decreased by 6.8 percentage points, and increased by 262% respectively [3]. Regional Performance - Domestic revenue faced challenges due to anti-corruption measures affecting surgical volumes, with approximately 5,000 three-dimensional surgeries performed in Q3 2024. The company reported a surgical volume of over 3,000 cases by the end of September [3]. - In contrast, overseas revenue grew by over 20% year-on-year in Q3 2024, despite some revenue recognition delays to Q4 2024 [3]. Research and Development - The company is advancing its R&D pipeline, with several products nearing clinical approval, including self-developed PFA catheters and collaborative projects with Stereotaxis [3]. - The PFA product from a joint venture is expected to receive domestic approval in the first half of 2025 [3]. Financial Projections - The report projects revenues of RMB 412 million, RMB 546 million, and RMB 716 million for 2024, 2025, and 2026 respectively, with corresponding year-on-year growth rates of 25.2%, 32.5%, and 31.1% [5][7].