Key points of investment
Incident: In 2021, the company began to achieve operating income of 2.150 million yuan; Gimu's net profit loss was 580 million yuan. The results were in line with our expectations.
The launch of the first product helped the company begin to achieve revenue, and R&D expenses were further increased: in June 2021, the company's flagship product, Dragonfly Eye, was approved by NMPA and successfully marketed. The company's revenue in 2021 also mainly came from the listing and sales of Dragonfly Eye DFVision.
In 2021, the company's R&D expenses were 393 million yuan, up 190.0% year on year; sales expenses were 79.19 million yuan, up 2840.5% year on year; administrative expenses were 107 million yuan, up 299.8% year on year.
The R&D pipeline is progressing steadily and the product portfolio continues to expand: In 2021, the company's products under development are progressing steadily. In addition to Yuanmai TouMai, which is suitable for urology, which has been approved by the NMPA, multi-center clinical trials covering various fields such as general surgery, thoracology, and gynecology were also successfully completed in January 2022. It is expected that Q1 in 2023 will be approved. At that time, it will be the first domestically produced endoscopic surgery robot covering multiple fields. Furthermore, Honghu also submitted an NMPA application in July '21, which is expected to be approved in '22, and submitted an FDA application in December '21. If successfully approved, it will be the first domestically produced surgical robot approved by the FDA in China. The remaining products, such as R-ONE, completed the first NMPA registered clinical case in November '21, and ISR'obottm Mona Lisa also completed the first case enrollment in November '21. Clinical trials for all products under development by the company are progressing steadily.
The “14th Five-Year Plan” superimposed surgeries into some medical insurance, and the market penetration rate of surgical robots is expected to increase rapidly: in December 2021, the “14th Five-Year Plan” medical equipment industry plan was introduced, which emphasized the goal of effective supply of a number of high-end medical equipment products, including endoscopic surgical robots; in April 2021, the Shanghai Municipal Health Insurance Administration issued policies to include four types of endoscopic robotic surgical procedures in the medical insurance reimbursement category; in August 2021, the Beijing Municipal Health Insurance Administration and other agencies jointly issued documents to include robot-assisted orthopedic surgery in Beijing's Class A medical insurance payment catalogue . The “Plan” issued by the Ministry of Industry and Information Technology and other departments, plus documents issued by various regions to include robot-assisted surgery in medical insurance, is expected to promote a rapid increase in the penetration rate of robot-assisted surgery in the Chinese market. As a leading domestic surgical robot enterprise, the company is expected to fully benefit from the high prosperity of the industry.
Profit forecast and investment rating: As the company's R&D progress exceeds expectations, we raised our revenue forecast for 2022/2023 from 0.34 billion yuan to 0.73 billion 508 million yuan, and forecast 2024 revenue of 1,037 million yuan. Considering that the domestic surgical robot industry is expected to usher in a period of rapid development, the company, as the leading surgical robot in China, has a complete product layout and obvious R&D advantages. It is expected to fully benefit from the high prosperity of the industry, cover it for the first time, and give it a “buy” rating.
Risk warning: Continued risk of the company's major operating losses, risk of new product promotion falling short of expectations, product development registration falling short of expected risk, risk of medical accidents.