Yantai Zhenghai Bio-Tech Co.Ltd(300653) ( Yantai Zhenghai Bio-Tech Co.Ltd(300653) ) the dental implant industry has a high prosperity, driving the rapid growth of the company’s products. In 2020, the penetration rate of implant teeth in China was only 29 teeth / 10000 people, which was less than one tenth of that in developed countries. Therefore, China’s dental implant market will develop rapidly driven by economic development and aging. After the centralized collection of dental implants enters the medical insurance, the operation cost will be further reduced, and the market growth is expected to accelerate again. The company’s dental repair film and bone repair materials are mainly used in dental implant surgery. The main imported competitive products account for about 70% of Gaishi city. The company’s products have excellent performance, so there is sufficient upward domestic substitution space. With the improvement of dental implant penetration and domestic substitution logic, the company’s oral business is expected to maintain rapid growth.
The absorbable dural patch business will continue to grow steadily during the intensive purchase period. The localization rate of absorbable dural patch market has reached 90%, and the company’s products account for about 15%. In 2021, the company has successively implemented the centralized purchase with volume in five provinces across the country. In the provinces where the centralized purchase has been implemented, the company is the only enterprise that has won the bid in all provinces. During the period of centralized purchase, the gross profit of the company’s products remained at a high level, and the revenue still achieved stable growth. With the continuous implementation of national volume procurement, the company’s absorbable dural patch business can continue to grow steadily in the future.
The company is rich in products under research, and the patented product active biological bone will be on the market soon. The company has rich reserves of products under development, and surgical packing sponge and self etching adhesive have been approved recently. The active biological bone of heavyweight products has entered the stage of hair and tonic, and the registration of products such as hard brain (spinal) membrane patch, dental repair material – general resin, breast patch and uterine cavity repair film is progressing steadily. Active biological bone mining is a combination product of medicine and machinery. It uses patented technology to overcome the shortcomings of foreign products and has high R & D and registration barriers. As China’s leading active BMP-2 auxiliary bone repair device, it has obvious advantages over competitive products in the industry. The short-term market space after listing is estimated to exceed 1 billion yuan.
Profit forecast and investment rating: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 210 million yuan, 260 million yuan and 340 million yuan respectively, and the PE will be 37 times, 29 times and 23 times respectively. Compared with comparable companies using the relative valuation method, the valuation level of the company is relatively low. Considering the rapid growth of the company’s original business and the imminent listing of patented products, a buy rating is given.
Risk factors: the centralized purchase policy exceeds the expected risk, the R & D registration is less than the expected risk, and the epidemic situation in China exceeds the expected risk.
