\u3000\u3 Guocheng Mining Co.Ltd(000688) 085 Shanghai Sanyou Medical Co.Ltd(688085) )
Key investment points
Event: the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the operating revenue was 593 million yuan, a year-on-year increase of 51.98%, the net profit attributable to the parent was 186 million yuan, a year-on-year increase of 57.19%, and the non net profit deducted was 126 million yuan, a year-on-year increase of 32.83%; In 2022q1, the operating revenue was 130 million yuan, a year-on-year increase of 9.59%, the net profit attributable to the parent company was 33.17 million yuan, a year-on-year increase of 10.75%, and the non net profit deducted was 30.55 million yuan, a year-on-year increase of 33.23%.
The spine business grew brightly, and trauma products began to be sold in large quantities. The company’s performance in 2021 was basically consistent with the previous express report. In 2021, the revenue and net profit recovered rapid growth, with a year-on-year growth rate of 52% and 57% respectively, of which the revenue of spine products was 516 million yuan (year-on-year + 41.13%, the same below); The revenue of trauma products was 28.95 million yuan (+ 26.05%). We expect that, on the one hand, the amount of orthopaedic surgery at the terminal of the hospital will resume to grow under the control of the epidemic, on the other hand, the company will actively expand and sink the channels. The expanded sales team last year began to see results. At the same time, the new hospitals will gradually increase in volume and the market development will be promoted smoothly. The company’s trauma products have successively won the bid for the centralized purchase of Henan twelve provinces alliance and the “3 + n” alliance of Beijing, Tianjin and Hebei in 2022, which helps the company expand its distribution channels, expand the market share of trauma products, and drive the further channel sinking of spine business. Quarterly, the operating revenue of 2021q4 is 175 million yuan (year-on-year + 43.53%, the same below), the net profit attributable to the parent company is 72.93 million yuan (+ 88.16%), and the non net profit is 35.88 million yuan (+ 49.94%); In 2022q1, the operating revenue was 130 million yuan (+ 9.59%), the net profit attributable to the parent company was 33.17 million yuan (+ 10.75%), and the non net profit deducted was 30.55 million yuan (+ 33.23%). 22q1’s performance fluctuation is expected to be mainly affected by the sporadic epidemic situation and geological disasters, and the orthopaedic surgery volume of some urban terminal hospitals has been greatly affected.
The gross profit margin and three expense rates remained stable. The gross profit margins of 2021 and 2022q1 companies were 90.50% (- 0.37pp) and 90.73% (+ 1.18pp) respectively, and the total cost rates of the three items were 53.20% (+ 1.32pp) and 52.54% (- 4.31pp) respectively, which remained basically stable. The cost rate of 22q1 decreased by 4.31pp year-on-year, mainly due to the decline of sales cost rate caused by the increase of revenue.
High proportion of R & D investment continues to enrich product types, and medium and long-term growth can be expected. The company continued to increase R & D investment for therapeutic innovation. The R & D expenses in 2021 and 2022q1 were 56.55 million yuan (+ 66.72%) and 12.31 million yuan (+ 33.95%) respectively, and the revenue accounted for 9.53% (+ 0.84pp) and 9.51% (+ 1.73pp) respectively. After years of research and development, the company has mastered a series of core technologies at the industry-leading level, including multiplanar adjustment, multiaxial extension and bone matching pedicle screw technology, flexible extension arm percutaneous screw technology, endoscope assisted percutaneous intervertebral space fusion technology, suspension channel frontal and lateral intervertebral space fusion technology, low notch integrated cervical fusion technology, correction and fixation technology of complex spinal deformities A new generation of intervertebral disc prosthesis and special instruments for the treatment of spinal tumors. By the end of 2021, the company had 27 registration certificates and 395 patents for three types of medical devices. At the same time, the company has strengthened R & D and strategic layout in orthopaedic related fields such as active equipment such as ultrasonic bone knife, sports medicine, new material application, surface modification of biomaterials and 3D printing, from focusing on the R & D of orthopaedic implants and other products to gradually paying attention to the provision of the whole surgical solution, constantly enriching product types and expanding service boundaries.
Profit forecast and investment suggestions: according to the latest announcement, considering the impact of epidemic situation and centralized spine mining, we adjusted the profit forecast. It is estimated that the company’s revenue from 2022 to 2024 will be RMB 686, 813 and 992 million (RMB 792 and 1056 million before the adjustment in 2022 and 2023), with a year-on-year increase of 15.65%, 18.51% and 21.97%, and the net profit attributable to the parent company will be RMB 223, 273 and 335 million (RMB 265 and 354 million before the adjustment in 2022 and 2023), with a year-on-year increase of 19.88%, 22.10% and 22.89%, The corresponding EPS is 1.09, 1.33 and 1.63 yuan. At present, the company’s share price corresponds to 18 / 15 / 12 times PE from 2022 to 2024. Considering the good growth of spinal implant consumables track, the company’s spinal product R & D strength is leading and its core competitiveness is outstanding. It is expected to benefit from the process of import substitution and market concentration improvement at the same time. At the same time, the service boundary continues to expand broadband to continuously enhance its comprehensive strength and maintain the “buy” rating.
Risk warning events: policy change risk, product quality and potential liability risk, risk that the long-term research and development and market development of trauma products do not meet the expectations, risk that the public information lags behind or is not updated in time, and risk that the price reduction of centralized purchase exceeds the expectations.
