\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 60 Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) )
Main points:
Event:
On April 19, 2022, the company disclosed the annual report of 2021 and the report of the first quarter of 2022. In 2021, the company achieved an operating revenue of 25.270 billion yuan, a year-on-year increase of about 20.18%, a net profit attributable to the parent company of about 8.002 billion yuan, a year-on-year increase of about 20.19%, and a net profit attributable to the parent company of about 7.85 billion yuan after deduction, a year-on-year increase of about 20.04%.
In the first quarter of 2022, the operating revenue was RMB 6.943 billion, with a year-on-year increase of about 20.10%, and the net profit attributable to the parent was RMB 2.105 billion, with a year-on-year increase of about 22.74%. After deduction, the net profit attributable to the parent was about RMB 2.072 billion, with a year-on-year increase of 22.20%.
Event comments:
China’s conventional business resumed growth, driving the company’s performance to maintain stable growth under the high base. Benefiting from the development of China’s new medical infrastructure and the recovery of the company’s conventional business after the Chinese epidemic was controlled, the company realized a revenue of 15.259 billion yuan in the Chinese market in 2021, with a year-on-year increase of about 37.3%, and the revenue growth rate exceeded 40% after deducting anti epidemic related products. Since 2021, China’s medical investment has increased significantly. The new medical infrastructure led by the expansion of large public hospitals has begun. The new medical infrastructure projects have gradually expanded from big cities including Beijing, Shanghai, Guangzhou and Shenzhen to other cities, and the demand for the company’s equipment products has continued to grow.
In 2021, the company’s overseas market revenue reached 10 billion yuan, with a year-on-year increase of about 0.95%. It still maintained a slight increase on the basis of the high base in 2020. After deducting anti epidemic related products, the revenue growth rate exceeded 35%. On the one hand, the epidemic situation in overseas markets has been normalized and routine business has been restored. On the other hand, in 2020, the company achieved a breakthrough in high-end hospital customers in overseas markets, laying the foundation for the admission of other products of the company. In 2021, Mindray continued its trend in Europe and emerging market countries, broke through more than 700 new high-end customers, achieved a horizontal product breakthrough of more than 700 high-end customers, and further consolidated its market position.
The company’s products have accelerated breakthroughs in the high-end market, and high potential innovative businesses are accumulating strength
By product line, the company’s life information and support production line achieved a revenue of 11.153 billion yuan in 2021 (a year-on-year increase of about 11.47%), with a year-on-year increase of more than 55% after deducting anti epidemic related products; The in vitro diagnosis production line achieved a revenue of 8.449 billion yuan (a year-on-year increase of about 27.12%), with a year-on-year growth rate of more than 40% after deducting anti epidemic related products; The production capacity of medical imaging realized a revenue of 5.429 billion yuan (a year-on-year increase of about 29.29%).
The company’s main product technology in the life information and support product line has entered the global leading stage, with outstanding product image. In the field of in vitro diagnosis, the company completed the acquisition of hytest, an upstream raw material supplier, in 2021. Hytest has a deep accumulation in raw material research and development and has an excellent scientific research team. After the acquisition, the company has a more comprehensive technological innovation ability in the field of in vitro diagnosis. In addition, the company’s automatic blood cell analysis bc-7500crp has become a popular model, making the company’s blood cell business the first brand in China. In the field of medical imaging, the company launched “Kunlun R7” (China), women’s and children’s application solution “Nuwa R7” (China), POC high-end flat-panel color Doppler te9 (global), i9 series and other medium and high-end products to achieve a breakthrough in high-end customer base. Mindray has achieved an integrated and intelligent solution covering high, middle and low-end, and has officially moved forward to the “leader” of the industry.
In addition to the three main products, Mindray also focuses on cultivating new businesses – minimally invasive surgery, animal medicine, orthopedics and AED. From the perspective of the company’s disclosure, the company’s other products achieved a revenue of 230 million yuan (mainly orthopedics) in 2021, with a year-on-year increase of about 73.67%. The diversified layout and technological breakthroughs of these high potential businesses will greatly expand Mindray’s accessible market and core competence and become a new growth pole of the company in the future.
Walking with hospitals, enabling high-quality development of medical institutions
DRG / Dip medical insurance payment reform has been accelerated, and “improving quality and efficiency” has become an urgent requirement for the high-quality development of medical institutions. In addition to assuming the role of equipment supplier, Mindray has also become a partner in the process of high-quality development of the hospital. The company uses its own resource advantages to help public hospitals build a resource system including hospital management system construction, discipline capacity construction, scientific research level improvement and talent training, and work together to build a high-quality medical ecosystem.
The company provides the overall scheme of emergency department, operating room, ICU and laboratory department, and the “SanRui ecology” scenario equipment interconnection solution starting from the Department, to the whole hospital and then to the cross hospital level, so as to help medical institutions improve their ability to treat difficult and severe cases, simplify the work process and effectively improve the work efficiency of medical staff; Give full play to the advantages of one-stop procurement of systematic platform, provide products with higher cost performance and reduce costs; Inter hospital interconnection directly reduces operating costs and helps the implementation of hierarchical diagnosis and treatment.
“Mairui intelligent test” laboratory scheme can help the hospital save 20-30% of the purchase cost of instruments and reagents. “Ruizhilian” it solution has achieved a cumulative number of more than 200 signing hospitals, with more than 150 newly added in 2021, with a rapid growth rate. “Ruizhilian” has been installed in many top hospitals since it was listed two years ago, including Beijing Union Medical College Hospital, Temple of Heaven hospital, Shanghai Zhongshan Hospital, Wuhan Tongji Hospital, Hunan Xiangya Hospital, Xi’an Xijing Hospital, the First Affiliated Hospital of Zhengzhou University and so on.
Share repurchase + equity incentive to convey the confidence of the company’s management
Since August 2021, the company has launched a share repurchase of 1 billion yuan twice and launched equity incentive schemes. The plan requires that the compound growth rate of the company’s net profit attributable to the parent company from 2021 to 24 shall not be less than 20%, and gives employees an attractive purchase price (50 yuan / share, about 15% of the closing price on the day when the equity incentive plan is announced). The incentive employees are the backbone employees of the company, which can fully mobilize their enthusiasm. The compound growth target of 20% is expected to become the lower limit of the company’s performance growth in the future, and also demonstrates the confidence of the company’s management in the sustained and stable growth in the next three years.
Investment advice
It is estimated that the total operating revenue of the company from 2022 to 2024 will be 30.581 billion yuan, 37.199 billion yuan and 45.204 billion yuan, with a year-on-year increase of 21.0%, 21.6% and 21.5%. The corresponding net profit attributable to the parent company was 9.907 billion, 12.114 billion and 14.662 billion, with a year-on-year increase of 23.8%, 22.3% and 21.0%. EPS is 8.15 yuan, 9.97 yuan and 12.06 yuan, corresponding to 40.29 times, 32.95 times and 27.22 times of the current share price PE respectively. The company is a leading enterprise of medical devices in China. It maintains the “buy” rating of the company based on the operation and profitability of the company.
Risk tips
Market environment risk;
Product development is less than expected risk.
