\u3000\u3 Guocheng Mining Co.Ltd(000688) 626 Xiangyumedicalco.Ltd(688626) )
Report guide
Xiangyumedicalco.Ltd(688626) is a rare platform enterprise providing overall solutions in the field of rehabilitation medicine. The company’s product structure, sales model and operation efficiency are gradually improving. We believe that with the accelerated promotion of rehabilitation related policies and the gradual improvement of covid-19 epidemic, the company’s performance is expected to usher in an inflection point and gradually enter the acceleration period.
Key investment points
The company has been deeply engaged in rehabilitation for 20 years and has gradually transformed to integration
Founded in 2002, the company is one of the few enterprises in China with R & D and production capacity of a full range of rehabilitation medical devices. The main products cover the three main areas of rehabilitation medical devices: rehabilitation evaluation, rehabilitation training and rehabilitation physiotherapy, including 20 series, with a total of more than 400 kinds of subdivided products. The company has been deeply engaged in the field of rehabilitation medical devices for 20 years, and has gradually developed from a R & D and manufacturer of single equipment to a platform company providing integrated solutions for clinical rehabilitation of the whole hospital. The sales scope covers 31 provincial administrative regions and more than 300 prefecture level administrative regions, forming a relatively large and complete channel sales network in China.
The company’s revenue structure has been continuously optimized and its profitability has been continuously improved
The company’s revenue in 2020 was 496 million yuan, a year-on-year increase of 15.9% (CAGR in 20172020 was 19.7%). The net profit attributable to the parent company was 196 million yuan, with a year-on-year increase of 51.9% (CAGR in 20172020 was 44.9%); From 2017 to 2021q3, the gross profit margin of the company increased from 59.6% to 69.1%, and the net profit margin increased from 22.3% to 37.2%. In the past five years, the company has continuously improved its profitability by continuously launching high-end new products, adjusting the sales product structure, improving the production process and exploring new business models.
The company has obvious competitive advantages and enjoys the development dividend of the industry
The coverage of products is the core competitiveness of the company. We believe that the construction of China’s rehabilitation medical system is still in the early stage of development. Under the background of continuous promotion of National Rehabilitation Policies and enclosure of enterprises, the breadth of products is particularly important in opening up blank markets in the early stage. The company is a rare enterprise in the industry with obvious competitive advantages in product breadth, which is mainly reflected in: ① there are rich types of products, the number of approved registration certificates is significantly higher than that of comparable companies, and gradually layout to high value-added products; ② Rehabilitation covers a wide range of sub fields, and can provide solutions for more than 30 specialized diseases; ③ It has strong channel sales ability and extensive accumulation of end customers. ④ The medical insurance coverage rate of the company’s products exceeds 94%. ⑤ Many products have been selected into the recommended items and the catalogue of excellent domestic medical equipment.
The industrial Internet will be prospectively distributed to further improve the integration of rehabilitation and medical treatment. Since 2019, the company has begun to build a forward-looking industrial Internet platform, participated in the “rehabilitation medical equipment industrial Internet cloud platform” project jointly organized by the Department of industry and information technology and the Department of finance of Henan Province, and was selected as the cultivation unit of rehabilitation medical equipment industrial Internet platform. We believe that the layout and promotion of industrial Internet projects will help the company form a unified organic whole in rehabilitation medical equipment, rehabilitation medical networking and rehabilitation medical consortium, and work together to achieve the interconnection of rehabilitation medical equipment and the integration of rehabilitation medical services. At the same time, relying on the Internet of things big data technology, the company can collect and analyze the clinical needs and experience fed back by terminal medical institutions, transform and upgrade them into new products and technologies, and finally form a deep binding with end customers and build a solid competitive barrier.
Favorable policies continue to accelerate, and there is a great prospect of rehabilitation
Demand side: the aging process of China’s population is accelerating, promoting the rapid release of rehabilitation medical needs. According to the research statistics of the lancet, the total number of people with rehabilitation needs in China has reached 460 million in 2019, with huge potential rehabilitation needs. Frost & Sullivan predicts that the scale of China’s rehabilitation medical device market will grow at a compound annual growth rate of 19.1% to 67 billion yuan in 2023. We believe that with the acceleration of China’s aging population, rehabilitation medical enterprises may usher in greater market development dividends.
Supply side: the construction of rehabilitation discipline may bring more than 57 billion demand. According to the data of the National Bureau of statistics, by 2019, there were 19963 general hospitals in China, and the general hospitals with rehabilitation medicine accounted for less than 30%. The penetration rate of rehabilitation medicine department is compared with the requirement of national policy that “rehabilitation medicine department shall be set up independently in general hospitals at level II and above”. We expect that the construction of rehabilitation discipline may bring more than 57 billion demand for rehabilitation medical devices (the demand for stock replacement is not considered temporarily).
Policy side: the rehabilitation policy has been accelerated, and the development of the industry has entered the fast lane. Since June 2021, the state has successively issued a number of more specific guiding policies on the construction of rehabilitation medical services, and at the same time, 15 provinces such as Beijing have been identified as pilot areas of rehabilitation medical services, which has comprehensively accelerated the development process of rehabilitation medical industry. We believe that 2021 will be a stage of accelerated policy promotion and comprehensive construction of rehabilitation concept; 2022 is the year of small-scale trial of ox knife, and the stage of initially forming industry norms and standards; 2023 will be the stage of accelerated expansion of rehabilitation medicine and accelerated release of terminal demand.
Profit forecast and valuation
We believe that with the acceleration of the national rehabilitation policy, the demand of the rehabilitation market will be released quickly. The first mover advantage of the company’s early horse racing enclosure, combined with the company’s continuously improving profitability, will also help the company carve up more market share. We believe that with the gradual dissipation of the impact of the epidemic and the accelerated development of the industry, the company’s revenue is expected to reach 523, 654 and 847 million yuan from 2021 to 2023, with a corresponding year-on-year growth rate of 5.6%, 24.9% and 29.6%; The corresponding share price of PE was 1.8 billion yuan, 2.2 billion yuan, and the corresponding share price of PE was 1.8 billion yuan, 2.9 billion yuan, respectively, with a year-on-year increase of 1.25%, 2.2 billion yuan. “Overweight” rating is given for the first time.
Risk tips
Risks of policy implementation and implementation falling short of expectations; Risk of technological innovation or new product R & D failure; The risk of intensified market competition; Risks of changes in industrial policies, etc.
