\u3000\u3 Shengda Resources Co.Ltd(000603) 309 Well Lead Medical Co.Ltd(603309) )
Event overview
The company released the annual report of 2021 and the report of the first quarter of 2022. In 2021, the operating revenue and net profit deducted from non parent company were 11.19 (- 1.07%) and 100 (- 34.82%) million yuan respectively. After excluding the influence of masks, the main business revenue increased by 12% year-on-year. We expect that the net profit is basically the same as that of the previous year, and the gross profit margin decreased by 1.39pp to 42.36%, mainly due to the poor performance of overseas business affected by the epidemic The impact of domestic sales reform, the increase of sales expense rate and the decline of mask business with high gross profit margin.
In the first quarter of 2022, the operating revenue and net profit deducted from non parent company were 301 (+ 36.85%) and 35 (+ 75.15%) million yuan respectively, which still exceeded expectations under the impact of the Chinese epidemic. We expect that the high growth of performance is mainly due to the recovery of foreign trade business, the expansion of new projects and the large volume of heavy single products in China. The profit growth rate is much higher than the revenue growth rate, which is mainly due to the decline of expense rate under the scale effect of the increase of business volume; The gross profit margin fell by 1.05pp to 41.49% year-on-year, which is expected to be mainly due to the accelerated growth of overseas businesses whose gross profit margin is much lower than that of domestic sales, and the change in the proportion of domestic and foreign sales has lowered the overall gross profit margin. The domestic business is expected to continue to increase with the volume of innovative products with high gross profit margin; During Q1, we expect that the Chinese business will be slightly affected by the March epidemic. Looking forward to the second quarter and even the whole year, it is expected that with the easing of the epidemic, the Chinese business is expected to show a trend of low before high, the overseas business will maintain rapid growth, and the overall performance is significantly upward.
Domestic branch sales combined with the advantages of innovative products, and the number of new entrants continued to break through
In 2021, the company’s domestic sales revenue reached 600 million yuan (+ 19.36%), with a year-on-year increase of about 26% (599 million yuan) after excluding the influence of masks. The company has integrated market channels and sales personnel, implemented in-depth marketing under the line-by-line sales mode, and accelerated academic promotion to promote the brand influence and terminal recognition of high gross profit innovative products such as visual double lumen endotracheal intubation, stone removal sheath, antibacterial urinary catheter and super sliding urinary catheter / bag, In 2021, 692, 376 and 196 academic activities were carried out for comprehensive nursing line, urology line and anesthesia line respectively, and the number of newly admitted hospitals continued to break through. 520 urinary catheterization products were newly admitted to the hospital (including 185 third class hospitals), 171 and 49 key products were newly admitted to the hospital, 190 key products of urology were newly admitted to the hospital (208 others), and 146 anesthesia products were newly admitted to the hospital. By the end of 2021, The company’s products have effectively covered all provinces and regions in China, and have entered more than 4000 hospitals in China (more than 1000 grade III hospitals). The response speed of the terminal market continues to improve.
Customized projects for major export customers rose against the trend, and multi product sales achieved a breakthrough
The company has more than 300 medical device registration certificates in the world and is exported to more than 90 countries and regions. In 2021, the export revenue was 506 million yuan, a year-on-year decrease of 18.17%. After excluding the influence of masks, the company achieved a revenue of 493 million yuan, which was basically the same year-on-year. It was mainly due to the obstruction of export business promotion under the epidemic, low shipping efficiency and high shipping costs. The company actively sought a breakthrough, Take advantage of technology and production capacity to strive for non-standard customized product projects for major customers. Orders from major customers in North America rose against the trend. At the same time, several new customized projects were signed, including OEM (silicone protective mask, nose accessories, silicone urinary catheter, reinforced endotracheal intubation), ODM (interstitial urinary catheter, super slippery latex urinary catheter), etc. at present, many projects are in the stage of technology research and development, and will be transformed into new incremental business in the next few years, In addition, the company achieved a breakthrough in the sales of pain infusion products, continued to increase the volume of veterinary products, and initially opened the sales market of European home care products.
Investment advice
The company’s fundamentals have undergone comprehensive and positive changes, the adjustment of domestic sales structure + the acceleration of large-scale production of innovative products with high gross profit, and the continuous breakthrough of export customized projects. It is expected that the company will usher in a period of rapid performance growth. Referring to the equity incentive conditions, we raised the profit forecast for 20222023, raised the operating revenue from 1.318/1.659 billion yuan to 1.358/1.699 billion yuan, kept the net profit attributable to the parent company unchanged, and added the performance expectation for 2024, It is estimated that from 2022 to 2024, the company’s operating revenue will be 1.358/16.99/2.197 billion yuan, with a year-on-year increase of 21.40% / 25.10% / 29.35% respectively, and the net profit attributable to the parent company will be 156 / 2.02/262 million yuan, with a year-on-year increase of 47.30% / 29.20% / 29.85% respectively. Due to the change of share capital, the corresponding earnings per share will be 0.53/0.69/0.89 yuan / share respectively, corresponding to the closing price of 13.00 yuan on April 21, 2022, and PE will be 24 / 19 / 15 times respectively, maintaining the “buy” rating.
Risk tips
The epidemic affects the supply of raw materials and product shipments, the approval and volume of new products are less than expected, the risk of changes in the international situation and exchange rate fluctuations, the risk of loss of core technicians, and the risk of sales being less than expected.
