\u3000\u3 Shengda Resources Co.Ltd(000603) 301 Zhende Medical Co.Ltd(603301) )
Recommendation logic: 1) medical field: the company will focus on stoma wound care and surgical sensing control and expand from OEM to independent brand. In 2020, the global high-end wound dressing, stoma care and surgical sensing control market will total more than 20 billion US dollars, while the Chinese market is in its infancy. The company is expected to achieve great development in the medical field through complete products, M & a extension, increased cash flow during the epidemic and hospital channels; 2) Health field: relying on the professional clinical academic background in the medical field, the company extends to the health field and makes joint efforts through offline chain pharmacies and online channels. In 2021, the company's domestic and overseas income excluding epidemic prevention is 320 million yuan (+ 39%), which is expected to continue to grow high in the future; 3) Performance trend: in 2021, the performance will fall back to the low base, and it is expected to achieve steady growth in the future. The company's equity incentive assessment trigger value target is RMB 700 million and RMB 800 million in 2022 and 2023 respectively, demonstrating the management's confidence in endogenous steady growth.
Focus on the "medical + health" strategy, with high endogenous performance growth. The company's business covers six categories of products: basic medical dressings, operating room sensing and control, stress treatment and fixation, stoma and chronic wounds, home care and personal protection. From 2014 to 2019, the company's annual compound growth rate of revenue was 13.6%, and the compound growth rate of net profit attributable to the parent company was 48.4%. In 2020, the first revenue exceeded 10 billion due to epidemic demand. In 2021, the revenue was 5.09 billion yuan (- 51%), and the net profit attributable to the parent company was 600 million yuan (- 76.6%), an increase of 172.6% compared with 2019, The performance increased by 279.8%, returning to the normal base and excluding the impact of the epidemic, the endogenous performance showed rapid growth. In 2020, a new strategy will be formulated to focus on the field of "medical + health", aiming to become China's leading 10 billion level leading medical and health enterprise with international influence. At present, the new strategy is advancing smoothly and the development path is clear.
Medical field: take stoma wound care and surgical sense control as the core, and expand from OEM to independent brand. 1) Stoma wound care: wound management is an important market segment in the field of medical devices. With the increase of chronic wounds and the maturity of wet healing theory, high-end wound care has become the main market. In 2020, the global high-end wound dressing market was about 6 billion US dollars and the Chinese market was about 1-2 billion yuan. It is in its infancy. With the help of a complete product matrix and the acquisition of Shanghai Asia Australia, the company is about to make efforts; With the increase in the incidence of colorectal cancer, bladder cancer and inflammatory bowel disease, the stoma care market continued to grow. In 2020, the global market (including bags and accessories) was 3 billion 300 million US dollars, and the composite growth rate of 20162020 was 6.5%, faster than the overall medical device market. China's ostomy market was 270 million yuan (about 1 billion 760 million yuan) during the same period. The company has complete stomatostomy products and is expected to benefit from the expansion of the industry. In 2021, the company's income from stoma and modern wound care was about 190 million yuan, which is close to 10 billion dollars in the world and 3-4 billion yuan in China. There is still a large share to improve. 2) Surgical sensing and control: the penetration rate of China's disposable sensing and control products and customized surgical combination package needs to be improved. The company has developed its own brand in the Chinese market. Overseas mainly through OEM layout and acquisition of rociale to expand its own brand abroad, which has achieved good results. In 2021, the company's surgical sensing and control revenue was 1.55 billion yuan, an increase of 12.5%, and it is expected to continue to grow in the future.
Health field: focus on medical grade personal care and family health care products. The company's main product lines in the field of health cover health protection, wound care, cleaning and disinfection, elderly care, health physiotherapy, medical personal care, pregnancy and infant care, etc. In terms of channels, the company mainly sells through offline chain pharmacies and online channels. The former has covered more than 90000 pharmacies, and the coverage rate of top 100 chain pharmacies has reached 97%. In the e-commerce retail line, the company has opened more than 10 stores on e-commerce platforms such as tmall, jd.com and pinduoduo, with a total of more than 5.2 million fans. It has accumulated high reputation and popularity in the C-end market outside the hospital, and continues to accelerate the transformation of traffic. In 2021, the company's income outside the hospital excluding epidemic prevention was 320 million yuan (+ 39%), and it is expected that the income outside the hospital of subsequent companies is expected to usher in rapid growth.
Profit forecast and investment suggestions: the income and performance will return to a low base in 2021, and then return to a steady growth track. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 720, 860 and 1.06 billion yuan, corresponding to 12, 10 and 8 times of PE. With reference to the average valuation of comparable companies in 2022 of 18 times PE, the target price is 56.9 yuan, which is covered for the first time and given a "buy" rating.
Risk tips: policy cost control risk, the implementation of the new strategy is not as expected, the risk of raw material price rise, the risk of acquisition and integration failure, and the risk of exchange rate fluctuation.
