\u3000\u3 Guocheng Mining Co.Ltd(000688) 198 Beijing Balance Medical Technology Co.Ltd(688198) )
Core view
The performance express is in line with expectations. On February 22, the company issued the announcement of 2021 annual performance express, which is expected to achieve an operating revenue of 252 million yuan in 2021, a year-on-year increase of + 38.45%; The net profit attributable to the parent company was 52.607 million yuan, a year-on-year increase of – 6.93%. After excluding the share based payment expenses, the net profit attributable to the parent company is expected to be 118 million yuan, a year-on-year increase of + 35.55%, which is consistent with the income growth rate, and the performance growth is in line with the expectation. Among them, the three business segments achieved year-on-year growth, and the revenue of heart valve replacement and repair segment increased by + 77.86% year-on-year; Implantation treatment of congenital heart disease + 30.84% year-on-year; Surgical soft tissue repair sector increased by 14.85% year-on-year.
The company’s biological valve sales maintained a strong growth rate and continued to benefit from the high growth of China’s valve industry. Benefiting from 1) the conversion of Chinese mechanical valve to biological valve and 2) import substitution, the company’s surgical biological valve is in a period of rapid volume. In 2021, the company achieved a single product revenue of heart valve of + 97.12% year-on-year. It is expected to achieve 5000 or more valve sales throughout the year, maintaining a strong growth rate. In addition, the company’s interventional valve and middle valve have fully carried out clinical trials. We believe that the core of the valve is membrane durability, that is, enterprises with real anti calcification processing ability will stand out in the valve market. The company’s surgical biological valve (bovine pericardium) has been followed up for more than 10 or 15 years, which fully proves its durability. In the long run, This advantage is expected to be further reflected in the company’s intervention valve field, and the company is expected to stand out in the heart valve field.
Animal derived organizations are innovative platform enterprises, and a number of R & D pipelines go hand in hand. The company is a platform enterprise with unique technology. In 2021, the company realized the first case of interventional aortic valve, tricuspid valve and mitral combined middle valve, which greatly changed the patients’ concern about the risk of secondary valve replacement with biological valve. At the same time, the company’s interventional middle valve, the first domestic balloon dilated interventional valve (TAVR) and interventional pulmonary valve were fully launched in large-scale multi center clinical trials in dozens of key head cardiac surgery hospitals. In addition to valves, the company’s bovine pericardial materials can be extended to multiple areas of soft tissue repair. Mature track, such as meningeal patch and hernia patch; Innovative tracks, such as vascular patches and ophthalmic patches, are pioneered in China, and their long-term development can be expected.
Profit forecast and investment suggestions
The company is a leading enterprise in animal derived tissue implantation and interventional devices. The sales of biological valves increased more than expected in 2020 and 2021. We raised the assumptions of revenue growth such as valve sales and lowered the assumptions of sales expense rate and management expense rate. It is expected that the company’s earnings per share in 21-23 years after deducting share payment will be 1.23/1.65/2.46 yuan (originally 1.09/1.52 yuan in 21-22 years), Considering that the company will have sufficient reserve pipelines in the future (TAVR interventional valve, valve middle valve, ophthalmic patch, vascular patch, etc.), high certainty of medium and long-term growth, and the uniqueness and scarcity of biosurgical flap, we adopt DCF valuation method with a target price of 207.59 yuan to maintain the “buy” rating.
Risk tips
Risks caused by R & D failure; Risk of product sales falling short of expectations; The risk of price decline caused by volume procurement and intensified competition; Valve market share is lower than expected; And the risk that the assumption does not meet the expectation is unfavorable to the valuation.
