\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 60 Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) )
2021 revenue / net profit attributable to parent increased by 20.2% / 20.2% year-on-year to RMB 25.3 billion / 8 billion, in line with market expectations. The growth rate of 4q21 net profit attributable to the parent company slowed down due to the introduction of employee cash incentives (about RMB 200 million), and the R & D expense rate of 4q21 increased by 4.8pcts year-on-year. 1q22 net profit attributable to the parent company increased by 22.7% year-on-year. It is expected that China’s new infrastructure will continue to develop in 2022, and overseas will benefit from the continuous breakthrough of high-end customers and the recovery of routine diagnosis and treatment and equipment related procurement. Maintain the “buy” rating and target price of 390.0 yuan.
The performance growth in 2021 was steady, and the growth rate of net profit attributable to parent company in 4q21 slowed down due to cash incentives. In 2021, revenue / net profit attributable to parent company / net profit attributable to non parent company deducted increased by 20.2% / 20.2% / 20.0% year-on-year to RMB 25.3 billion / 8 billion / 7.9 billion, which is in line with market expectations. Excluding the impact of exchange rate, revenue / net profit attributable to parent company increased by 22.4% / 24.3%. 4q21 revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company increased by 18.5% / 3.4% / 2.5% year on year. The slowdown in net profit growth was mainly due to the year-on-year increase in R & D expense rate of 4.8pcts. During the period, the company launched a new phase of long-term cash incentive plan (about 200 million yuan), and the incentive objects were mainly R & D personnel; The revenue side benefited from the recovery of new medical infrastructure and conventional procurement, and maintained a high growth rate.
1q22 in vitro diagnosis and medical imaging showed brilliant performance. 1q22 revenue / net profit attributable to parent company / deduction of net profit not attributable to parent company increased by 20.1% / 22.7% / 22.2% year-on-year. During the period, the accrued share based payment was about 56 million yuan. Excluding the impact of share based payment, 1q22 net profit increased by 26%. Both in vitro diagnosis and medical diagnosis performed well. The revenue of in vitro diagnosis increased by more than 30% year-on-year, and the revenue of medical imaging increased by more than 40% year-on-year. The growth rate of life information and support sector slowed down, mainly due to the influence of 1q21 high base. After excluding the influence of covid-19 products, the year-on-year growth rate of life information and support sector exceeded 40%.
China’s new infrastructure continued to make efforts, and overseas conventional procurement basically resumed. 1q22 new infrastructure related revenue is about RMB 1.7 billion, with a year-on-year increase of nearly 70%. The company expects that the new infrastructure can reach the market of more than 20 billion, and there is still large development space in the next 3-5 years. The recent increase of shelter hospital projects is expected to boost the company’s business to a certain extent. It is expected that the income related to new infrastructure will still record a high growth rate during the year. Overseas, multinational diagnosis and treatment and conventional medical procurement have been resumed. Mindray continued to achieve breakthroughs in high-end target hospitals during the epidemic (about 700 new hospitals were added in 2020 and 2021, and about 700 were accumulated before the epidemic). In the post epidemic era, the company is expected to continue to increase its market share through cost-effective and gradually localized production strategies.
Maintain the “buy” rating and target price of 390 yuan: Based on: 1) we are optimistic about the long-term prospects of new infrastructure, but the short-term promotion rhythm of new infrastructure is more conservative than before; 2) Mindray’s R & D expenditure is expected to be higher than our previous expectation. We lowered the forecast of 202223e revenue and net profit attributable to parent company by 1-7%, corresponding to 23% 202124ecagr. Maintain the target price of 390.0 yuan, corresponding to 48x2022epe. The target PE is 0.2 standard deviation lower than the average valuation of the company in the past three years.
Investment risk: policy risk, slowdown in industry growth and slower than expected increase in the company’s market share.
