2021 performance is in line with our expectations
The company announced its results for 2021: revenue of 416 million yuan, an increase of 50.6% over the same period last year, and a net loss of 374 million yuan, an increase of 192 million yuan over the same period last year, mainly due to the increase in R & D / sales expenses and the impairment of intangible assets. The performance is in line with our expectations.
Trend of development
TAVR implantation remained in the lead. In 2021, the company completed a total of 3600 TAVR (transcatheter aortic valve replacement) surgeries, with an increase of more than 60% compared with the same period last year, ranking first in the Chinese market. In addition, 1Q22 also completed about 900 implants. We estimate that more than 35% of the implants last year were second-generation recyclable products, and the second-generation proportion is expected to further increase to 50-60% this year. In terms of unit price, the company said it remained above 120000 yuan last year, basically the same as in 2020. Affected by the epidemic, we expect that the overall growth of TAVR implantation this year may be slower than the market had expected. The management estimates that the number of hospitals covered by Qiming Medical will reach 400 in 2022, with 5000-5500 commercial implants. As Medtronic PLC and other enterprises enter to carry out market education together, as well as the gradual accumulation of performer education, we are still firmly optimistic about the long-term volume growth in the field of TAVR.
Comprehensive layout of heart valves, and actively explore new areas of treatment. 1) Aortic valve field: the self-inflated dry valve PowerX and the repair product Leaflex are in the FIM stage in China, and the balloon dilated valve Vitae also carried out FIM in Argentina at the end of last year. The surgical valve is about to be implanted in 11 overseas bicuspid / tricuspid valves of FIM;2) Cardiovalve. The company expects to conduct clinical trials in China this year. The mitral valve repair products of Dejin Medical have been clinically confirmed at the end of last year; 3) the pulmonary valves in China and Europe have been submitted for registration and review, and are expected to be commercialized this year; 4) through mergers and acquisitions / cooperative layout of hypertrophic cardiomyopathy (Liwen procedure) and intractable hypertension (ultrasound ablation). In addition, the company's pulmonary valve, brain protector, mitral / tricuspid valve, ball dilated TAVR and many other products are undergoing overseas clinical research or registration applications, and the Global Heart Valve Innovation Center will be established in Israel in March 2022, we believe that the company's overseas revenue is expected to continue to grow.
Continue to increase R & D investment and improve management and operation efficiency. In 2021, the company spent 260 million yuan (+ 54.5%) on research and development, reached two equity acquisitions of Nuocheng Medical and Cardiovalve, and promoted the clinical progress of a number of products. The company's management expense rate decreased to 30.9% from 37.7% in 2020, and we expect the company's management / sales expense rate to decline steadily in the future.
Profit forecast and valuation
As the company continues to increase its R & D investment, we will increase the 23-year net loss of 2022 Universe by RMB 280 million to RMB 380 million respectively. We cut our DCF-based target price by 40 per cent to HK $23.76, which is 59 per cent higher than the current share price.
Risk
The progress of R & D is not as expected, the unit price of the product is lower than expected, and the competition pattern is deteriorating.