Sinocare(300298) 国盛证券·2024-11-06 04:10Investment Rating - The report maintains a "Buy" rating for the company [6] Core Views - The company's Q3 revenue showed steady growth, but profits declined due to fluctuations in gross margin and increased expense ratios [1][2] - The company is actively cultivating its second growth curve with CGM products, with the second-generation product expected to be approved soon and overseas markets showing promising potential [1][3] - The company has a strong presence in retail, clinical, and grassroots markets, laying a solid foundation for product expansion [4] Financial Performance - In Q1-Q3 2024, the company achieved revenue of RMB 3.182 billion, a YoY increase of 4.83%, but net profit attributable to shareholders declined by 19.71% to RMB 255 million [1] - In Q3 2024, revenue was RMB 1.049 billion, up 2.05% YoY, while net profit attributable to shareholders dropped 59.44% to RMB 57.86 million [1] - Gross margin in Q3 2024 was 55.38%, down 1.28 percentage points YoY, with sales expense ratio rising to 27.26% and R&D expense ratio increasing to 10.23% [2] CGM Product Development - The company launched its first CGM product domestically in 2023 and is advancing its second-generation product, which has been submitted for NMPA registration and is expected to be approved by the end of 2024 or early 2025 [3] - The second-generation CGM product features an integrated design, improving portability and user comfort [3] - The company has obtained registration certificates for CGM products in multiple countries, including China, Indonesia, the EU, and the UK, and is progressing with FDA clinical trials in the US [3] Market Expansion - The company holds nearly 50% of the retail market share, with over 22 million users and partnerships with more than 4,000 distributors and nearly 600 chain pharmacies [4] - In the clinical market, the company's products cover 30 provinces and are used in 3,500 hospitals above the secondary level, with over 1,200 hospitals utilizing its in-hospital glucose management system [4] - The company has expanded its reach to over 2,000 grassroots medical institutions and provides products and services to more than 9,000 community and township hospitals [4] Financial Forecast - Revenue for 2024-2026 is projected to be RMB 4.254 billion, RMB 4.796 billion, and RMB 5.492 billion, with YoY growth rates of 4.8%, 12.7%, and 14.5%, respectively [4] - Net profit attributable to shareholders is expected to grow by 17.1%, 20.6%, and 23.3% over the same period, reaching RMB 333 million, RMB 402 million, and RMB 495 million, respectively [4] - The company's P/E ratios for 2024-2026 are estimated at 44X, 36X, and 29X [4] Valuation Metrics - The company's P/E ratio is 32.5X for 2022, 51.0X for 2023, and projected to decrease to 43.6X, 36.1X, and 29.3X for 2024-2026 [5] - The P/B ratio is 4.9X for 2022 and 2023, with projections of 4.6X, 4.2X, and 3.8X for 2024-2026 [5]