\u3000\u3000 Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (300760)
Event: on the evening of January 19, 2022, the company issued the employee stock ownership plan (Draft) for 2022: it plans to repurchase 3048662 shares (accounting for about 0.2508% of the total share capital of the current company) with a total amount of 999970786.17 yuan (including transaction expenses) for the employee stock ownership plan. The participants of the employee stock ownership plan are the company’s core employees and technical backbones, with a total number of no more than 2700. The price of shares repurchased by the transferee company is 50 yuan / share. It is estimated that the employee stock ownership plan expenses to be amortized from 2022 to 2025 are expected to be RMB 387 million, 306 million, 140 million and 36 million, totaling RMB 870 million.
The subject shares obtained by the employee stock ownership plan are unlocked in three phases. The unlocking time points are 12 months, 24 months and 36 months from the date when the company announces the last transfer of the subject shares to the name of the employee stock ownership plan. The proportion of the subject shares unlocked in each phase is 1 / 3, 1 / 3 and 1 / 3 respectively. The performance evaluation of the three batches of unlocking is as follows: compared with 2021, From 2022 to 2024, the growth rate of net profit attributable to the parent company shall not be less than 20%, 44% and 73% respectively.
The compound growth rate of the net profit attributable to the parent company reached 20%, demonstrating the company’s confidence in sustainable and rapid development. The performance assessment target of the employee stock ownership plan corresponds to the compound growth rate of the net profit attributable to the parent company from 2022 to 2024, and the incentive fee does not affect the performance target. Excluding the share based payment expenses to be amortized, the actual growth rate of net profit in 2022 will exceed 24%, demonstrating the company’s confidence in sustainable and rapid development.
In addition, the incentive target covers a wide range, and the 2700 core technical or business personnel (not involving the company’s directors, supervisors and senior managers) are the backbone to promote the healthy and orderly development of the company’s business; The shareholding cost of 50 yuan / share reduces the financial burden of employees, and effectively combines the personal career planning and income improvement of the core backbone with the development of the company, so as to better stimulate the organizational vitality and talent potential.
Chinese market: the new infrastructure business opportunities have reached 20 billion, and 10 billion new space has been added to the thousand county project. (1) benefiting from the continuous attention of the state to the investment in the medical field, the new medical infrastructure projects have gradually expanded from big cities including Beijing, Shanghai, Guangzhou and Shenzhen to other cities. According to the company’s statistics, excluding the orders that have been landed by the end of 2021, from the perspective of Mindray’s accessible market, the current business opportunity of new medical infrastructure in China has reached 20 billion yuan. At present, all projects are progressing smoothly.
(2) on October 27, 2021, the National Health Commission issued the work plan for improving the comprehensive capacity of county hospitals of the “thousand county project” (2021-2025), which clearly pointed out to promote the sinking of provincial and municipal high-quality medical resources to the county, and at least 1000 county hospitals in China will reach the level of medical service capacity of level III hospitals by 2025. According to the company’s statistics, from the perspective of Mindray’s accessible market, the business opportunities brought by the “thousand county project” in the next few years are expected to reach 10 billion yuan.
With the continuous sinking of medical investment and resources, hospitals and medical institutions at and below the county level will gradually become the key direction of increasing construction in the future, and the duration and implementation scope of China’s new medical infrastructure will be further expanded. As a leading brand of domestic devices, Mindray’s strong product strength, comprehensive hospital level overall solutions and “SanRui” ecosystem are more suitable for the needs of new medical infrastructure and can better support the construction of smart hospitals.
Overseas market: continue to break through the blank of high-end customers and open up greater market space
In 2020, the company achieved a breakthrough of 700 blank high-end customers in the international market, exceeding the sum of the breakthroughs of high-end customers over the years, which has unprecedentedly improved the company’s brand influence worldwide and completely opened a new situation for the company in the international market. In the first half of 2021, the company further achieved a breakthrough in collaborative sales of 400 blank high-end customers (about 300 in emerging markets and about 100 in European markets) and 300 high-end customers respectively, and the growth of the international market will enter a new level in the future.
After the outbreak, many governments around the world are facing greater financial pressure. Government led public health projects and the procurement of private medical groups are more price sensitive. This is an important positive factor for Mindray, which has high operation efficiency, high product cost performance, complete product line and overall solution advantages. At present, the company has only a low single digit share in the overseas accessible market. In the long run, the company’s greater market space and more growth opportunities come from overseas markets, especially emerging markets. Therefore, the company’s market share goal in emerging markets will also move closer to the Chinese market, and continue to penetrate more top customers in Europe and America.
Profit forecast and investment rating: we expect the operating revenue from 2021 to 2023 to be 25.496 billion / 31.186 billion / 37.55 billion yuan respectively, with a year-on-year growth rate of 21% / 22% / 20% respectively; The net profit attributable to the parent company was RMB 8.243 billion / 10.002 billion / 12.11 billion respectively, an increase of 24% / 21% / 21% respectively; EPS is 6.78/8.23/9.95 respectively, corresponding to 41 times PE in 2022 according to the closing price on January 19, 2022. Maintain the “buy” rating.
Risk warning: the risk of continuous infection of New Coronavirus pneumonia. Risks related to Sino US trade frictions; Exchange rate fluctuation risk; Industry policy risk; Risk of product price decline.
