Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) high base affects the apparent performance, and the growth trend of routine business resumes

\u3000\u3 China Vanke Co.Ltd(000002) 223 Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) )

Key investment points

Event: on April 22, the company released its 2021 annual report. In 21 years, the company achieved an operating revenue of 6.894 billion yuan, a year-on-year increase of 2.51%, a net profit attributable to the parent of 1.482 billion yuan, a year-on-year decrease of 15.73%, and a deduction of non net profit of 1.319 billion yuan, a year-on-year decrease of 18.90%

The performance is in line with expectations, and the high base affects the apparent performance. In 2021, the overall revenue of the company slowed down due to the high base number of epidemic products in 2020. In 2021q4, the revenue in a single quarter was 1.584 billion yuan, a year-on-year decrease of 15.63%, the net profit attributable to the parent company was 131 million yuan, a year-on-year decrease of 47.43%, the deduction of non net profit was 88 million yuan, a year-on-year decrease of 62.34%, and the revenue scale decreased year-on-year and month on month, which was mainly affected by the quarterly fluctuations of epidemic products, We expect that the company's conventional products will gradually return to normal sales.

The decrease of high gross profit epidemic products + changes in freight and raw material prices led to a decline in profitability. The company's sales expense rate in 2021 was 13.71%, with a year-on-year increase of 2.50pp, which was mainly due to the increase in investment in the resumption of sales promotion activities after the epidemic. The management expense rate was 5.64%, with a year-on-year increase of 0.29pp, the financial expense rate was - 0.13%, with a year-on-year decrease of 2.03pp, and the R & D expense rate was 6.17%, with a year-on-year increase of 0.20pp; In the past 21 years, the company's product structure basically returned to normal, the proportion of epidemic products with high gross profit margin decreased, and the overall profit margin decreased due to factors such as freight adjustment and raw material rise. The company's gross profit margin was 48.29%, with a year-on-year decrease of 4.39pp, and the net profit margin was 21.53%, with a year-on-year decrease of 4.59pp.

The respiratory treatment business maintained a steady growth of 16% under the high base. In 2021, the company's respiratory treatment business segment achieved a revenue of 2.623 billion yuan, with a year-on-year increase of 16.04%. Among them, the high base number of ventilator products due to the special needs of the epidemic in 2020 decreased significantly year-on-year, but it still achieved a compound growth rate of more than 50% compared with 2019; After the outbreak of oxygen generator products, the overseas sales scale has been effectively expanded, with a year-on-year growth rate of nearly 80%. The sales business of atomized products has increased significantly compared with the same period of 20 years, with a year-on-year growth rate of more than 113%.

The diabetes business has achieved a super high growth rate of 70%, and China's market has been rapidly breaking through. In 2021, the company achieved diabetes revenue of 457 million yuan, an increase of 70.10% over the same period last year, continuing the trend of high growth. With the continuous improvement of the word of mouth of users both inside and outside the hospital, the market share and the user scale of BGM were breaking through the new high. Since the company's heavy variety dynamic blood glucose monitoring (CGM) was approved for listing in 2021, it has achieved 100 + admission in China, and has also achieved a relatively rapid volume outside the hospital. In the future, the company is expected to achieve sustained and rapid growth under the strategic coordination of BGM and CGM. In addition, the upgraded version of the blood glucose monitoring system CT2 is accelerating the clinical practice. The next generation of CT3 has completed the type checking, and the performance and user experience have been significantly improved. It is expected that the 22-23 year will be approved in a row to improve the certainty of the release of the diabetes Department's performance.

After the outbreak of disinfection, sensing and control and household sector, good performance was achieved under the high base, and rehabilitation and clinical devices ushered in a 13% restorative growth. In 2021, the company's revenue from sensing and control products was 893 million yuan, a year-on-year decrease of 6.03%, and the revenue from household electronic testing and in vitro diagnosis was 1.448 billion yuan, a year-on-year decrease of 18.11%, which was mainly affected by the high base caused by the rising demand for epidemic products in 20 years. In 2021, the company's rehabilitation and clinical equipment business realized a revenue of 1.228 billion yuan, a year-on-year increase of 13.35%, of which the year-on-year growth rate of wheelchairs exceeded 38%, and the year-on-year growth rate of acupuncture and moxibustion products was nearly 15%. With the improvement of epidemic prevention and control in China, all rehabilitation care products achieved rapid growth.

In the long run, the company has made it clear that breathing, blood glucose, household POCT and disinfection sensing control are the three core tracks, and has maintained steady development in the cornerstone businesses such as household electronic testing, in vitro diagnosis, rehabilitation and clinical devices. At the same time, it has actively arranged incubation businesses such as first aid, ophthalmology and intelligent rehabilitation, and its comprehensive competitiveness and overall anti risk ability are expected to continue to improve.

Profit forecast and Valuation: according to the annual report, we fine tune the profit forecast. It is estimated that the company's revenue from 2022 to 2024 will be RMB 8.086 billion, RMB 9.555 billion and RMB 11.297 billion, with a year-on-year increase of 17%, 18% and 18% (RMB 8.017 billion and RMB 9.432 billion before adjustment), and the net profit attributable to the parent company will be RMB 1.699 billion, RMB 2.02billion and RMB 2.401 billion, with a year-on-year increase of 15%, 19% and 19% (RMB 1.643 and RMB 1.946 billion before adjustment), with corresponding EPS of 169, 202 and 240. Considering the accelerated recovery of the company's conventional products and strong growth of emerging businesses, the brand strength outside China has increased rapidly after covid-19 epidemic, and the "buy" rating has been maintained.

Risk warning: there is a risk that the product promotion does not meet the expected risk, the duration of the epidemic is uncertain, and the public data used in the research report may have the risk of information lag or untimely update.

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