Report guide

On March 4, 2022, minimally invasive Healthcare issued a performance forecast that sales revenue is expected to achieve double-digit growth in 2021, with a loss of $275-$285 million. We believe that, thanks to the approval of the company's new products and the clearance of risks in the collection policy, the company's revenue has an accelerated growth trend from 2022 to 2023 and maintains its "overweight" rating.

Main points of investment

Event: income growth returns to positive, performance loss increases

On March 4, 2022, minimally invasive Healthcare issued an earnings forecast that is expected to achieve double-digit revenue growth in 2021, with a loss of $275-$285 million. The increase in performance loss is mainly due to: (1) the increase in R & D, registration and commercialization fees for surgical robots, heart valves and other plates; (2) the increase in overseas market development costs; (3) the increase in costs brought about by equity incentives; and (4) the decline in revenue and profit margins brought about by the collection of coronary stents.

The risk of collecting coronary stents and orthopedic joints is clear, and sales may increase steadily in the future.

The collection of orthopedic joints of coronary stents is on the ground, and the income is expected to grow steadily from 2022 to 2023. The company's coronary intervention was affected by the collection and epidemic situation in 2020, and the revenue changed by-48.8% compared with the same period last year. In 2021, the first year of collection support supply, the sales of mining winning supports rapidly increased to about 1 million, but the overall revenue still showed a decline, driving profit margins to decline. We believe that, thanks to the accelerated volume of collection and the increase in overseas sales of firehawk, the revenue growth of this sector may be about 18% in 2023. In the orthopaedic sector, the company's products are mainly joints, and 88% of its revenue comes from overseas. In 2021, the domestic joint collection won the bid, and the market share is expected to increase from 0.6% to 3.0%. We believe that, thanks to the collection and production volume, domestic joint sales may have a year-on-year growth of 150% per cent in 2022-2023; while overseas sales have maintained steady growth and the overall ex-factory price has been reduced by 10 per cent by 20 per cent, drive the sector's revenue to grow steadily by 15 per cent and 20 per cent.

High R & D investment products such as pacemakers and surgical robots are approved, or the volume will be released quickly.

Endoscopic surgery robot is approved, MRI compatible pacemaker, joint replacement surgery robot is expected to be approved to drive the dose. We believe that thanks to the improvement of penetration brought about by mining and the increase in the market share of domestic manufacturers, the company is expected to become the first approved domestic MRI-compatible pacemaker manufacturer, with domestic income CAGR expected to reach 204% in 2021-2023. Under the premise of overseas income returning to pre-epidemic levels and maintaining steady growth, the heart rate management plate CAGR34.8% will be promoted. In the surgical robot sector, at the end of January 2022, the company's Tumai endoscopic surgery robot was approved, becoming the first domestic four-arm endoscopic surgery robot manufacturer. The swan joint replacement robot is expected to be approved in 2022. Relying on the increase in the number of domestic joint products and the increase in the penetration rate of domestic endoscopic surgery robots, we believe that the company's surgical robots are expected to achieve volume in 2023. The revenue of this sector may reach 500 million yuan.

Income growth may accelerate, and the proportion of capitalized expenditure and expended expenditure is expected to decline.

With the switch between new and old momentum, gross profit margin is expected to pick up; product lines tend to improve, mergers and acquisitions are expected to slow down; investment in new products is stable, and the three major expense rates are expected to decline. (1) the gross profit margin is expected to rise to 68.4% in 2023. Affected by coronary stent collection and orthopaedic collection, we believe that the decline in gross profit margin in 2021 is inevitable, but with the implementation of the company's cost reduction and efficiency strategy and the increase in gross profit margin of newly approved innovative products, the company's gross profit margin is expected to pick up gradually. by comprehensively calculating the income and costs of various sectors, we believe that the gross profit margin is expected to rise to 68.4% in 2023. (2) capitalization expenditure is expected to decline. We believe that the company has laid out 12 major medical product lines, and the product line is perfect. In the next two years, large-scale mergers and acquisitions will decrease, with the commercialization of new products, goodwill and intangible assets have a downward trend. (3) the rate of the three major expenses is expected to decrease. We believe that the company's product innovation will continue, bringing R & D investment and management costs will continue to increase steadily, but thanks to the growth of the company's revenue, the R & D expense rate and management expense rate have a downward trend. In addition, due to the dual influence of the introduction of new products to increase sales costs and to reduce sales costs, we believe that the company's sales expense rate will remain stable at 34% 35% in 2022-2023.

Profit forecast and valuation

Due to the excessive drop in the ex-factory price of coronary stents in 2021, the drop in domestic revenue due to orthopedic collection, changes in exchange rate, and the increase in expenses brought about by the company's equity incentives, commercialization of new products and overseas market development, we have raised the company's sales expense rate, management expense rate and R & D expense rate, and lowered the company's profit forecast. We believe that from 2021 to 2023, the company's operating income was US $7.49 million, an increase of 15.4%, 30.6% and 37.6%, respectively, compared with the same period last year, and the corresponding net profit was US $2.78 million, respectively, and maintained the "overweight" rating.

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 that the integration of new M & A sectors is not as expected; the risk of foreign exchange fluctuations.