Report guide

Minimally invasive Medical is a leading high-value consumables platform company in China. In 2022, surgical robots, MRI-compatible pacemakers and other domestic first products may be approved, driving rapid performance growth, growth turning point is approaching, is a scarce, innovation-driven medical device leader.

Main points of investment

High value consumables platform company

Multiple products support the company's revenue growth. In 1998, the company started as a single product line of coronary stents. After 20 years of development, it has covered coronary intervention, orthopaedics, heart rate management (pacemakers), arterial and peripheral intervention, nerve intervention, heart valves, surgical robots and other plates. In 2020, the corresponding revenue ratios of the above sectors were 22%, 31%, 28%, 11%, 5%, 2%, 0%, respectively.

The inflection point is approaching, 2021-2023CAGR 38.7%

We believe that the approval of heavyweight innovative products and the collection of innovative products will lead to the clearing of policy risks and promote the company's growth inflection point, and the company's total revenue CAGR is expected to change from-4.1% in 2018-2020 to 38.7% in 2021-2023. We believe that the coronary and orthopaedic sectors will achieve steady growth due to the clearance of mining floor price reduction risk, permeability and market share improvement and stable volume; the company's growth is driven by heart rate management, surgical robots, nerve intervention, aortic and peripheral intervention, heart valves and other sectors approved by major innovative products.

Heart rate management, 2021-2023CAGR 38.3%. Heart rate management CAGR3.8%,2021-2023 CAGR is expected to reach 38.3% from 2018 to 2020, mainly due to the approval of high-end pacemakers and the increase in pacemaker permeability brought about by intensive mining. We believe that thanks to the increase in permeability brought about by the collection of pacemakers in 2021 and the imminent approval of MRI-compatible pacemakers in 2022, the company's domestic pacemakers are about to be released, and the domestic income CAGR is expected to reach 204% in 2021-2023, accounting for 30% of the sector's income from 5.8%. In addition, thanks to the basic improvement of the company's overseas pacemaker products in 2021, the company's overseas pacemaker revenue will also grow steadily from 2021 to 2023. CAGR20%, drives the company's heart rate management plate 2021-2023 to account for 27% of the company's revenue from 2021 to 2023, making it the company's highest share of revenue.

Orthopaedic instruments, collection brought 5 times the market share increase, 2022 lap 2023 25% Mel 35% steady growth.

The company's orthopaedic products are mainly joints, and 88% of its income comes from overseas. The domestic joint mining won the bid in 2021, thanks to the increase of 5 times the market share brought about by mining, and the domestic joint volume will be increased rapidly. We believe that the domestic joint sales may have a year-on-year growth of 150% per cent in 2022-2023. Under the premise that overseas sales have maintained steady growth and the overall ex-factory price has been reduced by about 10 per cent, the sector's revenue has grown steadily by 25 per cent.

After coronary intervention, the sales volume of collection stents is about one million, and the sales volume of 2022 picks will grow steadily by 20-30% in 2023. The compound growth rate of income from 2016 to 2019 was 18%. Affected by the collection and epidemic situation in 2020, the income changed by-48.8% compared with the same period last year. In 2021, the first year of collection support supply, the company's bid-winning support sales are about 1 million, which is much higher than the collection meaning vector of 260,000. We believe that thanks to the accelerated volume of collection, overseas channel expansion and new product iteration, the company is expected to gradually get out of the impact of collection and mining. The revenue growth of this sector may be 20% and 30% in 2022 and 2023, and is expected to return to more than 80% of the pre-mining income level by 2023.

Surgical robots have entered the harvest period, and the income is expected to exceed 500 million yuan in 2023. At the end of January 2022, the company Tumai endoscopic surgery robot was approved, and the swan joint replacement robot is expected to be approved in 2022, which is about to become the first approved four-arm endoscopic surgery robot + joint replacement robot manufacturer in China. With reference to Leonardo da Vinci's annual installed capacity in China, we believe that once the company is commercialized, it is expected to achieve sales of 25-35 units each in 2023, corresponding to 520 million yuan in revenue from the robot sector, an increase of about 983% over the same period last year.

Nerve intervention, aortic and peripheral intervention, heart valve and other product lines go hand in hand. In 2022, major products were approved in nerve intervention, aortic and peripheral intervention, heart valve and other plates. (1) Intracranial thrombectomy stents and three-dimensional electrolytic detachable coils of the nerve intervention plate are expected to be approved in 2022. As the largest nerve intervention manufacturer in China, thanks to the growth of the nerve intervention market and the improvement of the product line, the CAGR of this plate is expected to reach 50% and 60% in 2021-2023. (2) Aortic and peripheral intervention increased by 42% under the epidemic situation in 2022. We believe that thanks to the continuous release of peripheral drug balls approved in 2020, the approval of Talos in 2022 and the steady growth of the original aortic stent, the CAGR36.8% of this plate in 2022-2023. (3) the heart valve is the first year of volume in 2020, with revenue growth of 350% compared with the same period last year. There is only one TAVI product in the heart valve plate in 2020, and the second generation TAVI is approved in 2021, which is expected to achieve volume in 2022-2023.

Thanks to the support of multiple product lines and the volume of blockbuster products approved, the company's revenue has grown rapidly.

We believe that by 2023, the income of coronary intervention, orthopaedics, heart rate management, arterial and peripheral intervention, nerve intervention, heart valve, and surgical robot will be 15%, 24%, 27%, 13%, 9%, 6% and 5%, respectively.

Global layout, strong commercialization ability to promote multi-product volume

We believe that as a platform company of medical devices, the rapid commercialization of innovative products is very important.

The company's products cover more than 20000 hospitals and sales channels cover more than 80 countries and regions around the world.

2017-2020 the company's overall sales of 42-5.5 billion yuan, exports accounted for nearly 50%, whether in China or in the world, have a very strong commercialization ability to ensure the effective promotion of the company's products.

Profitability analysis

A decline in gross profit margin is inevitable and is expected to rise to 68.7% in 2023. 2021 is the first year of coronary stent collection and supply, and the gross profit margin of this sector is significantly reduced due to the impact of collection price reduction; joint collection products are also about to be supplied in 2022, which may lead to a partial correction of ex-factory price, slightly lower plate gross profit margin; however, with the implementation of the company's cost reduction and efficiency strategy and the pull-up of gross profit margin of newly approved innovative products, the company's gross profit margin is expected to pick up in 2023. From 2021 to 2023, by calculating the gross margin of each sector, we obtained the company's gross profit margin of 59.9%, 63.0% and 68.7%.

The cost of research and development has increased steadily. A number of innovative products of the company have brought continuous R & D investment. With reference to the steady increase in R & D costs from 2018 to 2023, we give the company's R & D investment of 100 million yuan in 15-17-19, corresponding to R & D expenditure rates of 29%, 24% and 19%.

The rate of sales expenses remained stable. Due to the dual impact of the introduction of new products to increase sales costs and to reduce sales costs, we believe that the sales expense rate will remain stable at 34% 35%.

Administrative expenses have increased steadily. The company's new products and new pipelines continue to be launched, and management personnel and expenses increase steadily. With reference to the steady increase in management expenses in 2018-2020, we give 100 million yuan on 13-15-17 in 2021-2023, corresponding to a management expense rate of 25%, 21% and 17%.

Based on the above assumptions, the return net profit of the company from 2021 to 2023 is-174Mather 135max $19 million.

Profit forecast and valuation

Based on the above assumptions, we estimate that the company's total revenue from 2021 to 2023 will be US $791 million, up 22%, 36% and 42%, respectively. With reference to the valuation of comparable companies, the value of 9 times PS in 2022 is given, corresponding to a market capitalization of US $9.7 billion, and the corresponding target price is 41.34 yuan.

Risk hints: the risk that the R & D and commercialization of new products are not as expected; the risk that the price reduction of medical device collection or collection is much higher than expected; the continuing risk of COVID-19 epidemic; the risk of fluctuations in the company's sales channels; the risk of intensified competition in the industry; the risk of less-than-expected integration of new M & A sectors; the risk of foreign exchange fluctuations.