\u3000\u3 Guocheng Mining Co.Ltd(000688) 029 Micro-Tech (Nanjing) Co.Ltd(688029) )
Events: 1) the company released its annual report for 2021, with annual revenue of 1.95 billion yuan (+ 46.8%), net profit attributable to parent company of 320 million yuan (+ 24.5%), net profit not attributable to parent company of 280 million yuan (+ 29.7%) and net operating cash flow of 170 million yuan (- 25.3%). 2) The company released the first quarterly report of 2022. The revenue of 22q1 was 440 million yuan (+ 12.5%), the net profit attributable to the parent was 43.37 million yuan (- 35.1%), the net profit not attributable to the parent was 42.93 million yuan (- 31.8%), and the net operating cash flow was – 23.32 million yuan (- 140.8%).
In 2021, revenue maintained rapid growth and achieved high growth both in China and abroad. The share based payment expense in 2021 was 77.05 million yuan. Excluding this factor, the net profit attributable to the parent company was 390 million yuan (+ 46.3%). 1) Quarterly, the revenue of 2021q1 / Q2 / Q3 / Q4 in the first quarter was 3.9 / 4.8 / 5.1 / 560 million yuan (+ 59.5% / + 48.7% / + 42.6% / + 41.1%), an increase of 37.1% / 45.5% / 50% / 60.8% respectively compared with 2019q1 / Q2 / Q3 / Q4, and the net profit attributable to the parent company in the first quarter was 0.67/0.76/1.05/0.76 billion yuan (+ 41.1% / + 15% / + 11.3% / + 45.7%) respectively. 22q4 revenue and performance maintained rapid growth. 2) From the perspective of profitability, the gross profit margin in 2021 was 64.2% (- 1.8pp), mainly due to the depreciation of the US dollar, the rise of freight and the profit transfer of pinduoduo activities. The four rate was 46.6% (+ 0.2pp), which was basically stable, and the final net profit margin was 16.7% (- 3PP). If the influence of share based payment was excluded, the endogenous profitability was stable. 3) In terms of subregions, China’s revenue in 2021 was 1.2 billion yuan (+ 48.1%), and its international revenue was 740 million yuan (+ 44.5%). After overcoming the impact of the epidemic, China and other countries achieved rapid growth in 2021. 4) By business, the revenue from hemostasis and closure is 890 million yuan (+ 53.1%), biopsy is 240 million yuan (+ 33.7%), expansion is 190 million yuan (+ 16.2%), ERCP is 130 million yuan (+ 28.7%), EMR / ESD is 260 million yuan (66.1%), EUS / EBUS is 18.05 million yuan (+ 48.5%), microwave ablation needle is 1.3 million yuan (+ 58.9%), and visualization products contribute 9.75 million yuan.
22q1 is under pressure due to factors such as China’s epidemic situation and overseas geographical conflicts, and visualization contributes a new growth point. The share based payment fee of 2022q1 was 15.68 million yuan, and the net profit attributable to the parent company in the first quarter after excluding it was 58.71 million yuan (- 34%). In terms of subregions, China’s revenue in 2022q1 was 280 million yuan (+ 21.8%), mainly due to the severe epidemic situation in China, which affected endoscopic surgery and routine examination. The international revenue was 170 million yuan, which was the same as that of 2021q1. Due to the geographical conflict in the European market, the company switched some OEM businesses to direct sales mode and was still in the transition period, the revenue of the European market in the first quarter decreased by 13.9% compared with that of 21q1, and the American market still increased by 30.29%. The visualization revenue of 2022q1 company is 45.58 million yuan, accounting for 10.3% of the revenue, and a new growth point is taking shape.
The global endoscopic diagnosis and treatment device market has a huge space. The company continues to increase innovation and enrich product reserves. With the continuous popularization of endoscopic surgery, the demand for endoscopic diagnosis and treatment devices is increasing. According to the statistics and analysis of Boston science, the global endoscopic diagnosis and treatment device market was US $5 billion in 2018, and the overall growth rate of the global endoscopic diagnosis and treatment device market was 5% from 2019 to 2022. The company’s global market share is only a low single digit, and there is huge room for improvement in the future. In 2021, the company increased R & D investment, with R & D expenses of 150 million yuan (+ 53.4%), of which the focus was on the R & D of visualization products. The disposable choledochoscope product was certified in China in November 2021 and became an important increment in the Chinese market in 22q1; Disposable bronchoscope products have been submitted to FDA, CE and China for registration. It is planned to be approved successively in 2022. In the future, visualization series products are expected to contribute new growth momentum.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 400 million, RMB 530 million and RMB 700 million respectively. As the leader of endoscopic diagnosis and treatment innovative devices, the company has continuously improved its global competitiveness and maintained the “buy” rating.
Risk tips: R & D failure risk, policy cost control risk, exchange rate risk, and the volume of new products is less than expected.
