Performance review
2021 performance is in line with our expectations
The company announced results for 2021: revenue of US $779 million, an increase of 20 per cent year-on-year (excluding the exchange rate effect of 15 per cent), and a net loss of US $276 million, an increase of 45 per cent over the same period last year, mainly affected by the increase in R & D / management costs, the COVID-19 epidemic and the price reduction of coronary / orthopaedic collection. The performance is in line with our expectations.
Trend of development
Coronary artery / orthopaedics / heart rhythm management operated smoothly. 1) Last year, the company shipped about 1.2 million coronary stents (including about 200000 overseas), the second largest in the world. Revenue from balloon and accessories products increased by 47.5% to US $24.5 million, and the product portfolio also added DSA, OCT, etc., and the absorbable stent Firesorb has completed all patient enrollment. The company expects revenue from coronary artery business to grow by 13-15% this year, with overseas business accounting for about 20%. 2) Orthopaedic overseas revenue reached US $193 million, an increase of 11.8% compared with the same period last year (excluding exchange rate effects). The company expects orthopaedic overall / Chinese / overseas revenue to grow by 14-16%, 50% and 8-10% respectively this year. 3) after excluding the exchange rate, the heart rhythm management business grew by 18.8% year on year last year, and the company expects the overall / China / overseas growth of 10%, 25-30% and 6-9% respectively this year. We expect orthopaedic and heart rhythm management businesses to break even in 4Q23 and 2024, respectively.
Rapid expansion of multiple business sectors. 1) after deducting the influence of exchange rate, the income of large artery and peripheral intervention, nerve intervention and heart valve increased by 45.6%, 72.5% and 93.2% respectively compared with the same period last year. In 2022, we expect to achieve more than 80% growth of 35-40%, 50% and 80% respectively. All three maintain the first / second domestic status.
2) robotics business, Tumai Endoscopic surgery Robot has been approved, Swan Orthopaedic Robot has submitted applications for NMPA and FDA registration, and we expect commercial revenue to increase significantly in 2023.
Continue to increase R & D investment and global layout. Management issued guidelines for 2022: revenue growth of 20-25%; gross profit margin maintained at 63-64%; sales expense rate of about 38%, mainly overseas investment; management expense rate dropped to about 28% (32% last year) The R & D expense rate is 37-39%, mainly focused on clinical promotion of robot business, CRM replenishment product line, heart valve TAVR product upgrade and tricuspid valve layout, and American clinical trial of coronary Firehawk stent (the company expects a cost of about $30 million and will be approved by FDA around 2024). In terms of internationalization, the company has built its American headquarters in Southern California and expanded its overseas sales team to promote the development of excellent products in various sectors. We expect the company to have stronger revenue growth from 2023 and break even in 2024-25.
Profit forecast and valuation
As the company continues to increase its R & D and sales investment, we will reduce the 23-year homing net profit of 2022 Lexus by US $130 million to-US $280 million respectively. Based on the long-term bullish view of the company's business lines, we maintain an outperform industry rating and a target price of HK $24.63 based on the DCF model, which is 38.5% upside from the current share price.
Risk.
The price reduction of collection and mining exceeded expectations, the progress of research and development was not as expected, and the competition pattern deteriorated.