\u3000\u3 Guocheng Mining Co.Ltd(000688) 617 Apt Medical Inc(688617) )
Domestic pioneer in electrophysiology and vascular intervention. Founded in 2002, the company’s main business includes electrophysiology, coronary access, peripheral vascular intervention and OEM. The company has completed four innovative track layouts of electrophysiology, coronary intervention, peripheral intervention and nerve intervention. In 2020, the operating revenue will reach 479 million yuan, with a year-on-year increase of 18.68%; The net profit was 104 million yuan, a year-on-year increase of 33.45%. According to the performance express in 2021, the company achieved an operating revenue of 829 million yuan, a year-on-year increase of 72.8%; The net profit attributable to the parent company was about 207 million yuan, a year-on-year increase of 86.5%. From the compound growth rate of 20172021, the company’s operating revenue and net profit attributable to the parent achieved high growth of 68.5% and 83.1% respectively. The company is the leader of domestic electrophysiological products and ranks third in coronary artery pathway. In 2019, the company entered the peripheral intervention track, completed the commercialization of access devices such as microcatheter and angiography catheter, and the products of vena cava filter and aortic stent entered the clinical trial stage. It is expected to be approved for listing in 2024. In 2020, the company entered the nerve intervention track, and more than 9 core products were approved by nmpa.
Cardiovascular disease is the first fatal disease, and there is a wide space for electrophysiological and vascular interventional therapy. According to China cardiovascular health and disease report 2020, the prevalence of cardiovascular diseases in China continues to rise, with a total number of more than 330 million people, and the mortality rate of cardiovascular diseases is higher than that of tumors and other diseases. Cardiovascular and peripheral vascular therapy related interventional devices are the largest branch of current high-value consumables. Coronary intervention products have been purchased with quantity since 2020, and domestic brands have exchanged quantity with price, and the market share of successful manufacturers has exceeded 30%. The company’s balloon products have won the bid in many provinces. In the future, with the expansion of high-value consumables, micro catheter, guide wire and other products are expected to further improve the market share. Peripheral vascular and cerebrovascular intervention is still in the early stage of development. It is expected to reach a total market size of 19 billion yuan in 2024 with a compound growth rate of 12.1%.
Domestic electrophysiological leaders have obvious first mover advantage. The market share of imported brands in electrophysiology industry exceeds 90%, and there is a wide space for import substitution. Domestic leaders will benefit from the double dividend of “industry expansion + import substitution”. At present, the company is a domestic leader in electrophysiology, with core technology advantages in key areas of the industrial chain and a world-class R & D team. The company took the lead in completing the whole line layout of electrophysiological examination, mapping, positioning and ablation. In 2021, the three-dimensional electrophysiological system htviewer was listed, and the company entered the field of supraventricular tachycardia treatment. In the future, with the approval of pressure sensing ablation catheter and magnetoelectric positioning mapping catheter, it will further break the import monopoly of imported three-dimensional system atrial fibrillation treatment. Electrophysiological therapy has high requirements for enterprise doctor education and technical follow-up. Enterprises that take the lead in completing product listing and online admission will build first mover advantage barriers.
The platform development of “specialization and innovation” has broad prospects for going to sea. As a pioneer of domestic innovative devices, the company has successfully turned from “specialized and special new” to platform development, which is enough to prove the excellent R & D and commercialization ability of the company. In the early years, the company started by OEM and customized products for international medical device giants. Up to now, the company has mastered a number of upstream material processing technologies such as welding, shape memory alloy processing, catheter weaving process and ultra precision processing and grinding, breaking a number of import monopoly technologies such as “steel wire mesh reinforced extrusion”, “hydrophilic coating” and “dissimilar alloy docking”. The company has fully realized independent processing and manufacturing of catheter, balloon, guide wire and other vascular intervention products, and has excellent product transformation ability. Star products such as micro catheter, controllable decapolar mapping electrode catheter and hydrophilic coating guide wire have improved the popularity of the company at home and abroad. By December 2021, the company has completed the approval of 14 products. The channel products are expected to be approved by FDA by the end of 2022, with broad prospects for going to sea. The overseas business is expected to reach 25% of the total revenue in 2025.
Profit forecast and Valuation: as a domestic leader, the company has obvious first mover advantages and outstanding industry dividends. With the rapid development of innovative therapy, both Chinese business and overseas business will enter the harvest period. It is estimated that the growth rate of the company’s revenue in 21-23 years is 72.8% / 30.9% / 37.8%, the growth rate of net profit is 86.5% / 59.6% / 37.5%, the earnings per share in 21-23 years is 3.10/4.95/6.80 yuan, and the reasonable valuation is 252287 yuan. For the first time, give a “buy” rating.
Risk warning: the risk that the price reduction of centralized purchase exceeds the expectation; The risk that the R & D progress is less than expected; The risk that the operation is not carried out as expected; The risk of product price decline and gross profit decline caused by homogeneous competition; The risk that overseas business expansion is less than expected.
