\u3000\u3 Guocheng Mining Co.Ltd(000688) 198 Beijing Balance Medical Technology Co.Ltd(688198) )
The sales of surgical valves continued to be in high volume, and the performance was in line with expectations. The company released its 2021 annual report and the first quarterly report of 2022. In 2021, the company achieved an operating revenue of 252 million yuan, a year-on-year increase of + 38.42%, mainly due to the continuous and large-scale sales of surgical biological valves; The net profit attributable to the parent company was 51 million yuan, a year-on-year increase of - 9.42%, mainly due to the impact of equity incentive amortization. Excluding equity incentive amortization, the net profit increased by + 33.55% year-on-year, maintaining a rapid growth trend. The company plans to pay a dividend of 48 million yuan, accounting for 94.18% of the net profit. In terms of the first quarterly report of 2022, although Beishang Shenzhen and other cities were disturbed by a certain epidemic, the company still maintained a rapid growth rate, with an operating revenue of 66 million yuan in 2022q1, a year-on-year increase of + 26.34%; The net profit attributable to the parent company was 14 million yuan, a year-on-year increase of + 53.54%, maintaining a rapid growth. In the first quarter, there was still the disturbance of equity incentive and R & D cost base. After excluding relevant factors, the growth rate of profit side is expected to be slightly lower than that of revenue side. By sector, Q1 valve sales achieved a year-on-year increase of + 44.91%, still maintaining rapid growth; Cardiac valve revenue + 36.24% year-on-year; The patch sector increased by 13.59% year-on-year, maintaining steady growth.
The R & D of the company is progressing smoothly, the valve layout is gradually improved, and the long-term development can be expected. During the reporting period, the company continued to increase R & D investment. In 2021, the annual R & D cost was 58.9 million yuan, accounting for 23.39% of the operating revenue, ensuring the full implementation of clinical trials. At present, the company's clinical progress is smooth. Recently, the company's heavy products, ball expanded valve, ball expanded TAVR products and ophthalmic patches have completed the enrollment of all patients. It is expected that these products will be listed in 2023 / 24. If these products are listed, the company's profits will enter the explosive stage. We expect that the company's revenue and profit will accelerate quarter by quarter in 2022. On the one hand, the company's early efforts are mainly focused on the clinical entry of core products, and the company's sales will be further strengthened after the entry is completed; On the other hand, with the increase of surgical valve admission and the listing of upgraded surgical valve (limited expandable surgical valve), and the factors of R & D expenses and equity incentive will be gradually eliminated, the operation quality of the company will be continuously improved, and the long-term development is worth looking forward to.
The company is a platform enterprise of biological tissue materials. Its long-term durability has been verified, and the value of the platform has gradually become prominent. The core advantage of the company lies in the treatment of biomaterials. The durability of surgical biological valve has been fully verified, as well as the patch and congenital heart disease business. We believe that the patch and congenital heart disease business also have great space in the future. At present, the company has reserved hernia patch, brain patch, lung patch, ophthalmic patch, stentless valved pipeline, congenital heart patch and other products, and the platform value is gradually highlighted.
Due to the excellent valve sales and Xianxin sector sales of the company, we slightly increased the operating revenue. It is estimated that the net profit attributable to the parent company in 202224 after deducting share based payment will be 160 / 242 / 438 million yuan (the original 22-23 was 159 / 237 million yuan). Considering that the company has sufficient reserve pipelines (valve in valve, TAVR interventional valve, ophthalmic patch, vascular patch, etc.) and the clinical trial is progressing smoothly in the future, According to DCF valuation method, we maintain the target price of 207.59 yuan in the early stage and maintain the "buy" rating.
Risk tips
Risks caused by R & D failure; Risk of product sales falling short of expectations; The risk of price decline caused by volume procurement and intensified competition; Valve market share is lower than expected; And the risk that the assumption does not meet the expectation is unfavorable to the valuation
