Core ideas:
The core business remains robust. Recently, the company issued a 21-year annual results announcement, achieving revenue of 779 million US dollars (YOY+20%, excluding exchange rate impact, the same below), the company's core business as a whole maintained steady growth. (1) Coronary artery business achieved operating income of US $13.95 billion (YOY-10.8%) in 21 years, which was mainly affected by domestic collection, of which overseas income was US $19.9 million (YOY+34.5%), and overseas was partly affected by the epidemic. (2) Orthopaedic business realized income of US $216 million (YOY+5.1%) and overseas income of US $193 million (YOY+11.8%). It is affected by collection in China, but it is expected to increase market share and hospitalization rate through collection. (3) the income of heart rate business is 220 million US dollars (YOY+18.8%). Thanks to the volume of new products, the cumulative value in China is more than 10,000.
With the rapid growth of heart valve, Shensuke and the peripheral plate of aorta, the product of surgical robot is progressing smoothly. The business of heart valves, nerve intervention products and large arteries and peripheral vascular intervention products still maintained rapid growth, recording an increase of 93.2%, 72.5% and 45.6%, respectively, after excluding the impact of exchange rates. Tumai first-generation products were approved to be listed in China in January 2022, and the second-generation multi-disciplinary clinical products have been completed; Swan has submitted applications for NMPA and FDA registration.
Research and development will continue to move forward. The cost of R & D in 21 years is 298 million US dollars, of which the investment of robots is relatively large. It is expected that the R & D investment will continue for 22 years, and the focus is expected to be on the multi-track promotion of surgical robots, the CRM completion product line, the track layout of the valvular business, the overseas clinical practice of the coronary artery business, and the incubation of new businesses including ophthalmic assisted reproduction.
Profit forecast and investment advice. The estimated operating income for 22-24 is US $9.57,12.57 and 1.802 billion. As a leading domestic equipment company, the company will continue to benefit from research and development and continued product volume in the future, but due to the downward valuation of the equipment sector as a whole, we downgrade the company's fair value to HK $23.75 per share (HK $7.84 / US $) according to DCF valuation, maintaining a "buy" rating.
Risk hint. Research and development progress is not as expected, overseas commercialization is not as expected, and policy impact.