2021 results are in line with our expectations
The company announced 2021 results: revenue of 90 million yuan, +519%; R&D expenses of 76 million yuan, +49%; net profit - 194 million yuan; smooth admission and release of the company's listed products, in line with our expectations.
Development trends
Plug removal devices are leading, and commercialization of products already on the market is progressing smoothly. Of the company's revenue of 90 million dollars in 2021, we determined that the main revenue contributors were the core products Captor plug holder and ExtraFlex remote access conduit. In 2021, the company's sales network included more than 100 distributors, covering more than 1,400 hospitals in 31 provinces (including cities and districts) in China. At the same time, the company's full set of plug removal devices has basically completed the national product market entry procedures, and product admission is progressing in an orderly manner. In terms of core product upgrades, the Captor bolt holder has been upgraded to add more stent models with different lengths and diameters. Currently, the company is evaluating opportunities to expand the range of indications.
Neural interventional device development is progressing smoothly, providing comprehensive solutions. Currently, the company has 11 neurointerventional devices approved by the NMPA, 2 of which have been approved by the US FDA. In addition, 3 products are in clinical trials and 4 are in the registration review stage. The embolization spring ring has been approved by the NMPA. At the same time, clinical trials of vascular reconstruction stents and blood flow guidance devices have begun, and we expect the hemorrhagic device layout to gradually improve. Among channel devices, the company's product, the first blocked hemostasis device in China, was approved by NMPA. We believe the company's diverse device portfolio can provide comprehensive neural intervention solutions, meet doctors' needs to reduce brand changes and operating habits, and help break through the market.
The research pipeline is rich, providing a guarantee for medium- to long-term growth. Currently, the company is developing about 20 pipeline products, including left atrial occluders for cardiac intervention, electrophysiology, and coronary artery intervention robots, covering fields with high clinical demand such as atrial fibrillation treatment, stroke prevention, structural heart disease, and heart failure, and have great potential. At the same time, the company is also continuously exploring innovative devices in the fields of pulmonary intervention and computer-aided intervention. Currently, the company has 50 registered patents in China, including 13 invention patents, 36 utility model patents and 1 design patent.
Profit forecasting and valuation
We are keeping our 2022 and 2023 earnings forecasts unchanged. Considering the recent impact of liquidity factors in Hong Kong stocks and systematic adjustments in the pharmaceutical sector, we lowered the target price of H shares by 17.8% to HK$60 (8.8 times 2026 forward price-earnings ratio), which is 46.5% upward from the current stock price. Maintain outperforming industry ratings.
risks
Product development failure; clinical trials failure; product registration delayed or impossible to complete; market competition; sales falling short of expectations; product price reduction; product quality; changes in government regulation or guidelines; intellectual property litigation; financing difficulties; cancellation of government subsidies; dilution of equity; loss of personnel.