\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 60 Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) )
Event: on the evening of April 19, 2022, the company released its annual report for 2021: the company achieved an annual operating revenue of 25.270 billion yuan, a year-on-year increase of 20.18%; The net profit attributable to the parent company was 8.002 billion yuan, a year-on-year increase of 20.19%; Deduct non net profit of RMB 7.85 billion, with a year-on-year increase of 20.04%. The net cash flow from operating activities was 8.999 billion yuan, a year-on-year increase of 1.45%; The basic earnings per share is 6.5868 yuan, and a cash dividend of 35 yuan (including tax) is planned to be distributed to all shareholders for every 10 shares.
Among them, the operating revenue in the fourth quarter of 2021 was 5.878 billion yuan, a year-on-year increase of 18.46%; The net profit attributable to the parent company was 1.339 billion yuan, a year-on-year increase of 3.41%; Deduct non net profit of RMB 1.306 billion, with a year-on-year increase of 2.46%. The net cash flow from operating activities was 2.902 billion yuan, a year-on-year increase of 0.76%.
On the same day, the company released the report for the first quarter of 2022. In the first quarter, the company achieved an operating revenue of 6.943 billion yuan, a year-on-year increase of 20.10%; The net profit attributable to the parent company was 2.105 billion yuan, a year-on-year increase of 22.74%; Deduct non net profit of RMB 2.072 billion, with a year-on-year increase of 22.20%. The net cash flow from operating activities was 870 million yuan, a year-on-year decrease of 21.68% (we estimate that it is mainly related to the reduction of contract liabilities, the 21-year cash incentive plan and the increase of strategic reserves of raw materials).
Medical imaging and in vitro diagnosis business led the growth, and China’s new medical infrastructure accelerated the expansion of the medical device market
From the product dimension: (1) life information and support: in 2021, the annual sales revenue reached 11.153 billion yuan, an increase of 11.47% year-on-year, and an increase of more than 55% after deducting anti epidemic related products (monitors, respirators and infusion pumps); The gross profit margin decreased by 1.59pct to 66.39% year-on-year. The good growth of life information and support business is mainly due to the gradual development of new medical infrastructure led by the expansion of large public hospitals in China; In addition, the non epidemic related products restrained by the epidemic recovered gradually during the reporting period, and the Seed Businesses of AED and minimally invasive surgery achieved rapid growth. (2) In vitro diagnosis: the annual sales revenue was 8.449 billion yuan, with a year-on-year increase of 27.12%, and an increase of more than 40% after deducting anti epidemic related products (chemiluminescence covid-19 detection reagent); The gross profit margin increased by 2.78pct to 62.51% year-on-year. Due to the continuous recovery of routine diagnosis and treatment, physical examination and surgery worldwide, the consumption of conventional reagents has recovered significantly. At the same time, thanks to the rapid increase of bc-7500crp, a popular new product integrating high-end fluorescent five classification, automatic peripheral blood injection and high-speed CRP joint inspection, the in vitro diagnosis business has achieved rapid growth in the reporting period. Among them, the company’s blood cell business surpassed the imported brand for the first time and became the first in China. (3) Medical imaging: the annual sales revenue was 5.426 billion yuan, a year-on-year increase of 29.29%; The gross profit margin increased by 0.16pct to 66.34% year-on-year. With the gradual recovery of routine diagnosis and treatment and physical examination worldwide, ultrasound procurement activities also returned to normal, driving the medical imaging business to achieve high restorative growth in the reporting period. Among them, the ultrasonic business of the company surpassed the imported brand for the first time and became the second in China.
From the regional perspective: (1) China business: in 2021, the annual sales revenue reached 15.259 billion yuan, a year-on-year increase of 37.34%, and an increase of more than 40% after deducting anti epidemic related products. The Chinese market mainly benefits from the accelerated expansion of the medical device market by the new medical infrastructure and the accelerated localization of the Chinese medical device market. According to the company’s statistics, from the perspective of accessible market, the market space of China’s new medical infrastructure has exceeded 20 billion yuan by the end of 2021. (2) International Business: the annual sales revenue reached 10 billion yuan, a year-on-year increase of 0.96%, and an increase of more than 35% after deducting anti epidemic related products. In 2021, the company broke through more than 700 new high-end customers in Europe and emerging market countries. In addition, more than 700 existing high-end customers achieved horizontal breakthroughs in more products: ① the company broke through about 130 new high-end customers (including high-end laboratories) and about 250 existing high-end customers in Europe; ② The company has broken through more than 600 new high-end customers in emerging market countries and horizontal product breakthroughs of more than 450 existing high-end customers.
In the first quarter of 2022: (1) from the regional dimension, ① the routine diagnosis and treatment activities of the hospital and various businesses of the company have returned to normality, the breakthrough of in vitro diagnosis and medical imaging in China’s high-end market continues to accelerate, while the construction of new medical infrastructure continues to increase, and the Chinese market has achieved rapid growth. ② Overseas routine diagnosis and treatment activities have fully recovered to the pre epidemic level, and various routine businesses have achieved significant recovery. The North American market has achieved rapid growth thanks to the major breakthrough of high-end medical consortium customers. (2) Production line dimension: ① the recovery of routine diagnosis and treatment activities in hospitals around the world has rapidly revived the procurement demand for ultrasound, blood cells, biochemistry, chemiluminescence and other products, driving the rapid growth of medical imaging and in vitro diagnosis; ② Thanks to the accelerated development of China’s new medical infrastructure and the rapid development of emerging businesses such as AED and minimally invasive surgery, the life information and support business has continued a good growth trend.
The net interest rate of the whole year was stable at 31.67%, and the net interest rate of 22q1 increased by 0.67pct year-on-year
In 2021, the company’s comprehensive gross profit margin increased by 0.04pct to 65.01% year-on-year, the sales expense rate decreased by 1.35pct to 15.83%, the management expense rate increased by 0.11pct to 4.38%, the R & D expense rate increased by 1.10pct to 9.99% year-on-year, and the financial expense rate decreased by 0.05pct to -0.34% year-on-year; Under the comprehensive influence, the overall net profit margin of the company was stable at 31.67%. Among them, the company continued to ensure high R & D investment, with an annual R & D investment of 2.726 billion yuan, a year-on-year increase of 30.08%.
In the fourth quarter of 2021, the comprehensive gross profit margin, sales expense rate, management expense rate, R & D expense rate, financial expense rate and overall net profit rate were 63.03%, 19.65%, 4.46%, 15.22%, 0.00% and 22.77% respectively, with changes of + 4.12pct, + 3.86pct, + 0.39pct, + 4.77pct, -0.42pct and -3.33pct respectively. Among them, ① the comprehensive gross profit margin and sales expense rate have increased significantly. We estimate that it is mainly due to the centralized transfer of part of the freight from the previous “sales expense” account to the “operating cost” account due to the adjustment of accounting policies in the fourth quarter of 2020; ② The increase in R & D expense rate is large. We estimate that it is because the company launched a new phase of long-term cash incentive plan in 2021 (the incentive object is mainly R & D personnel) and accrued other relevant bonuses at the end of the year.
In the first quarter of 2022, the comprehensive gross profit margin, sales expense rate, management expense rate, R & D expense rate, financial expense rate and overall net profit rate were 65.10%, 15.45%, 5.16%, 10.14%, -0.11% and 30.35% respectively, with changes of + 0.08pct, -1.01pct, -0.45pct, -0.03pct, -0.66pct and + 0.67pct respectively. If the effects of effective tax rate, share based payment and exchange rate fluctuations are excluded, the overall net interest rate will increase more significantly.
Profit forecast and investment rating: we expect the company’s operating revenue to be 30.558 billion yuan / 36.725 billion yuan / 44.072 billion yuan from 2022 to 2023, with a year-on-year growth rate of 21% / 20% / 20% respectively; The net profit attributable to the parent company was 9.657 billion yuan / 11.667 billion yuan / 14.062 billion yuan, an increase of 21% / 21% / 21% respectively; EPS is 7.97/9.62/11.60 respectively, corresponding to 41 times PE in 2022 according to the closing price on April 19, 2022. Maintain the “buy” rating.
Risk warning: the risk of continuous infection of New Coronavirus pneumonia. Risks related to Sino US trade frictions; Exchange rate fluctuation risk; Industry policy risk; Risk of product price decline.
