\u3000\u3 Guocheng Mining Co.Ltd(000688) 677 Qingdao Novelbeam Technology Co.Ltd(688677) )
The company’s annual report will be released on February 26, 2021 and 2024. In terms of performance, 1) the performance of the 21st Annual Report is in line with expectations: the operating revenue is 309 million yuan (+ 12.53%), the net profit attributable to the parent company is 118 million yuan (+ 22.19%), the non net profit attributable to the parent company is 94 million yuan (+ 12.02%), and the cash flow from operating activities is 104 million yuan (- 9.39%). The reasons for the decrease of cash flow are as follows: first, the increase of production orders in 21 years increased the material inventory and the increase of material purchase expenditure; Second, the number of employees in the company has increased and the salary of employees has been increased, and the salary of employees has increased due to the impact of the cancellation of social security relief policy; Third, the company’s expenditure on sales activities, R & D activities and other management activities increased year-on-year. 2) The growth rate of 22q1 exceeded expectations, and the sales of endoscopes accelerated: 22q1 company achieved revenue of 93 million yuan (+ 39.21%), net profit attributable to parent company of 36 million yuan (36.98%), net profit not attributable to parent company of 34 million yuan (+ 34.19%), and cash flow from operating activities of 24 million yuan (- 25.21%). The increase in revenue was mainly due to the increase in sales of medical endoscope devices, and the decrease in cash flow was the reason for the increase in the base of 21q1 government subsidy of 13 million yuan. After deducting the government subsidy for 21 years, the cash flow of 22q1 operating activities increased by 24.81%.
In the past 21 years, the performance has accelerated recovery, and the listing of China’s 4K laparoscope has driven China’s growth. 1) Quarter by quarter, the performance of the whole year of 21 years accelerated recovery. The covid-19 epidemic in the United States had a certain impact on the medical endoscope device business in the first half of the year, and recovered well in the second half of the year. Q1-Q4 revenue was RMB 0.67/0.68/0.82/0.92 billion respectively, with a year-on-year increase of -6.16/7.56/29.59/20.03% respectively. Q1 revenue decreased by – 6.16% year-on-year, due to the impact of exchange rate and the decrease of delivery in the first quarter instructed by annual order customers. Q2-q4 revenue increased steadily. Q3 and Q4 operating revenue increased significantly, mainly due to the increase in the shipment of medical endoscope products since the third quarter. 2) By region, the sales of endoscopes in China continued to rise, improving the profitability of products. Foreign revenue was 247 million yuan (+ 4.26%), Chinese revenue was 63 million yuan (+ 66.30%), and China’s gross profit margin was 58.02%, up 15.84pp. 3) In terms of business model, China’s 4K laparoscope has been listed and sold, significantly increasing the income of independent brands. ODM revenue was 214 million yuan, accounting for 69.18%; OEM revenue is 76 million yuan, accounting for 24.50%; The revenue of independent brand products was 20 million yuan, accounting for 6.33%, an increase of 66.00% year-on-year.
The fluctuation of the epidemic affected the supply chain. Endoscopic products and optical products continued to grow in 21 years, and the demand for orders of Stryker endoscopy resumed. In 2021, the revenue of medical endoscopic instruments was 227 million yuan (+ 12.57%), accounting for 73.55% of the main business revenue. The covid-19 epidemic in the United States had a certain impact on the medical endoscope equipment business in the first half of the year, and the demand for orders of Stryker endoscopes resumed in the second half of the year; The revenue of optical products was 82 million yuan (+ 13.42%), accounting for 26.45% of the main business revenue. The decrease in the growth rate of optical products is due to the impact of global chip supply, which makes the overall production of foreign customers lag behind.
The self owned brand endoscope was registered and listed, and the OEM 4K fluorescent endoscope was mass produced in the second half of the year, forming a “transformation + R & D + reserve” R & D echelon. In 21 years, the R & D investment was 41 million yuan (+ 33.71%), and the R & D expense rate was 13.35%. 33 new patent applications and 16 new authorized patents were added. The R & D echelon is orderly. 1) R & D projects have been completed: the company has successfully developed its own brand of ultra-high definition endoscope camera system products, endoscopes, LED cold light source products and palm vein products. The 4K fluorescent laparoscope developed for Stryker has completed the R & D and trial production process, and mass production will be realized in the second half of 2022. 2) R & D projects: 4K ultra-high definition fluorescent thoracoscopy, arthroscopy and hysteroscopy, automatic defogging endoscope system, contactless metacarpal vein module and terminal equipment, ultra long abdominal endoscope, automatic cell image acquisition instrument, series of laser lenses, etc; 3) Reserve items: 3D fluorescent endoscope design and technology, 3D endoscope camera technology, electronic endoscope imaging technology, confocal endoscope, ultra long laparoscope and bone marrow cell image collector.
The company is deeply bound to the international endoscope leader Shrek, with long-term and stable performance growth, and the listing of independent brands is expected to be replaced by domestic products. The company is one of the leading enterprises in the field of endoscopic instruments in China. The company has in-depth cooperation with the international leader of endoscopy. It is the only supplier of fluorescent laparoscopic light source modules and adaptive lenses. In recent years, China’s hard mirror market has grown rapidly. It is estimated that in 24 years, China’s hard mirror market will be 11 billion yuan and CAGR will be 11%; Among them, domestic brands account for no more than 11%, and there is great potential for import substitution. The company’s high-end fluorescent hard mirror is more promising. The imaging of fluorescent hard mirror is better than that of white light hard mirror, and the whole fluorescent hard mirror includes white light mode, which is expected to gradually replace the market of white light endoscope. Externally, the next generation of Stryker products will be introduced to the market in 22 years, which is expected to become the main driving force for the growth of the company’s export revenue in the future. At the internal level, the company actively expands the whole machine business, and has mastered the relevant technologies required to form the core components of the endoscope into the whole machine system, which have been successively certified to provide long-term growth points. In the long run, with the large-scale business of Stryker and the continuous improvement and promotion of the whole machine system, Qingdao Novelbeam Technology Co.Ltd(688677) is expected to become a leading enterprise in the field of endoscopic instruments in the world.
Profit forecast and investment rating: we expect the company’s revenue from 2022 to 2024 to be RMB 502 / 663 / 868 million respectively, 62.00/32.10/31.00% year-on-year respectively. The net profit attributable to the parent company was 185 / 256 / 337 million yuan respectively, with a year-on-year increase of 56.84/38.77/31.57% respectively. EPS is 2.12/2.95/3.88 yuan respectively, and the corresponding PE is 34.18/24.63/18.72 times respectively. It is covered for the first time and given the investment rating of “buy”.
Risk tip: the impact of the epidemic exceeded expectations, the rate of medical insurance fee control and product price reduction exceeded expectations, and the promotion progress of new products was less than expected.
