Event: on August 30, 2021, the company released semi-annual results: in the first half of 2021, the company achieved operating income of US $385 million, an increase of 17.7% over the same period last year (excluding exchange rate effects); gross profit was US $248 million, an increase of 13.80% over the same period last year, and net profit was-US $115 million.

The incubator achieved high growth and continued to promote the international layout company's revenue of US $385 million in the first half of 2021, an increase of 17.7% over the same period last year. From the point of view of the business segment, the collection of related stents and orthopaedic products are gradually expanding overseas, and the performance of the incubation plate is gradually realized:

1) Cardiovascular business, continue to promote the promotion of overseas markets, the company's revenue in the first half of 2021 was 66.8 million US dollars, down 29.9% from the same period last year, mainly due to the decline in stent prices caused by the purchase of coronary stents in China. Coronary stent collection, the company's product market share first, on the one hand, the two stents Firebird2 and FirekingfisherTM are bid-winning products, winning bid volume occupies the first place in the whole market. On the other hand, the product coverage of hospitals has further increased. By the first half of 2021, the company's drug-eluting stents covered more than 2700 hospitals, including 555 hospitals in Firebird2 and 98 hospitals in Firehawk. And the collection of Chinese coronary stents accelerates the process of overseas commercialization of the company. In the first half of 2021, the company's overseas stent sales revenue was 7.1 million US dollars, an increase of 8.4% over the same period last year. Nine new countries have been approved for listing, and so far, a total of 33 countries have been approved for listing. Among them, Firehawk Liberty stents have entered health insurance in South Korea, Belarus, Turkey and other countries. The company will continue to sell volume in overseas markets in the future.

2) Orthopaedic business has maintained high growth both at home and abroad. In the first half of 2021, the company achieved a revenue of 110 million US dollars, an increase of 22.9% over the same period last year. This is mainly due to the increase in the number of orthopedic operations and the gradual expansion of the volume by virtue of product advantages. Of this total, China's income was 15.1 million US dollars, an increase of 37.5% over the same period last year, and joint income increased by 116.9% over the same period last year. Overseas revenue was US $95 million, up 20.9% from the same period last year, including 34.2% in France and 15.1% in Japan.

3) in terms of heart rhythm management business, the domestic growth rate has increased significantly, and the company achieved revenue of 108.3 million US dollars in the first half of 2021, an increase of 20.0% over the same period last year. Of this total, overseas revenue was 102.3 million US dollars, an increase of 17.3% over the same period last year. In the future, with the EU CE certification for new pacemakers and defibrillation equipment, overseas markets will maintain a high growth rate. In China, the company achieved revenue of US $6 million, an increase of 95% over the same period last year, of which the revenue of domestic pacemakers increased by 116% over the same period last year, covering 134 new hospitals and entering 584 hospitals, gradually increasing the influence of the brand and further increasing the market share.

4) in terms of large arteries and peripheral vascular intervention, the rapid admission of new products contributed to revenue. The company's revenue in the first half of 2021 was US $55.8 million, an increase of 68.6% over the same period last year, mainly due to the steady growth of aortic stents and the rapid admission of the new product Reewarm PTX drug balloon dilatation catheter, which was launched in 2020. At present, Reewarm has been sold in more than 250 hospitals, thoracic aortic stents have been covered in more than 250 hospitals, and single-branch thoracic aortic stents in Castor have covered 600 hospitals.

5) in terms of neural intervention products, vascular remodeling devices continued to increase permeability, and new products were gradually approved to market. In the first half of 2021, the company achieved revenue of 25.4 million US dollars, an increase of 114.5% over the same period last year, mainly benefiting from the rapid release of products. On the one hand, the original product vascular remodeling devices penetrated into hospitals at all levels through the strategy of hierarchical promotion, covering 110 new hospitals and entering 475 hospitals.

On the other hand, new products such as spring coils were approved to go on the market in 2020 and began to be released in 2021. And the company strategically invests in Rapid Medical, an Israeli company of neurovascular interventional devices, to promote the cooperation and layout of the neurovascular intervention product line.

6) in terms of heart valve business, TAVR business has entered a stage of rapid growth. In the first half of 2021, the company achieved a revenue of US $13.4 million, an increase of 121.8% over the same period last year, and its gross profit margin increased to 55.1%. Mainly due to the recognition of VitaFlow aortic valve admission, it has entered 80 new hospitals, and the top 20 TAVR operation hospitals have covered 19. The new product second-generation recyclable aortic valve was approved for launch on August 31, 2021, bringing new performance growth points. In the medium and long term, the company is rich in valve pipelines, and the third generation TAVR self-expanding valves, ball-dilated valves and five mitral valve intervention products are in the stage of research and development.

7) in terms of surgical robot business, the product has been approved to market and entered the stage of commercial promotion, and the company is the only company in the world that covers the product portfolio of endoscopy, orthopaedics, panvascular, natural lumen and percutaneous puncture surgery. In the first half of 2021, the company's self-developed DFVision three-dimensional electronic laparoscope was approved to appear on the market. Tumai Toumai endoscopic surgery robot and swan orthopaedic surgery navigation and positioning system have submitted registration applications.

8) in the surgical business, products have been approved for listing overseas. In the first half of 2021, the company achieved revenue of US $2.3 million, down 1.6% from the same period last year. Among them, suction tubes were certified by EU CE, arterial and venous catheterization were approved for listing in Egypt, and arterial microthrombus filters and venous catheterization were approved for listing in Colombia. With the company's products approved to be listed in overseas countries, going out to sea has entered a new era.

R & D-driven company, multi-product pipeline layout

The company focuses on R & D and innovation, with R & D investment of US $117 million in the first half of 2021, an increase of 60.80% over the same period last year. Among them, 7 products were approved for listing in China, 2 products were approved by FDA in the United States, 14 products were certified by EU CE, and 21 products entered the green channel of examination and approval. On the one hand, the company distributes new business sectors, including non-vascular intervention, sports medicine, assisted reproduction, rehabilitation and other areas. On the other hand, the company promotes the continuous iteration of the existing 8 major product lines, including bioabsorbable stents for cardiovascular intervention product lines, drug-eluting stent iterative products, knee joint revision and treatment products for orthopedic business, and thrombectomy stents for nerve intervention business.

Profit forecast: as a leader in the field of medical devices, the incubation business is expected to maintain high growth. The company's revenue from 2021 to 2023 is expected to be US $7.97,10.25 and US $1.364 billion, respectively, an increase of 22.84%, 28.67% and 33.01% over the same period last year. Maintain "hold" rating.

Risk hints: product research and development is not as expected, product sales are not as expected, product collection policy risk, R & D is not as expected, foreign exchange fluctuation risk.