The company's performance continued to grow rapidly in 2021, in line with market expectations. As a leading enterprise in the field of orthopaedics in China, the company has established obvious first-mover advantages in trauma, spine and other fields, and continues to deepen the layout of joint, minimally invasive surgery, dental and other tracks. Taking into account the short-term impact of volume procurement and the increase in the company's equity, the company's EPS forecast for 2022-2023 is 1.76max 2.09 yuan (the original forecast is 2.490.14 yuan), and the new 2024 EPS forecast value of 2.45 yuan, the current price corresponds to PE20/17/14 times, maintaining the "buy" rating.
The performance is growing steadily, in line with market expectations. In 2021, the company realized operating income of 1.994 billion yuan, an increase of 25.68% over the same period last year. The net profit of returning to the mother and deducting non-net profit was 673 million yuan, an increase of 11.17% and 11.48% respectively over the same period last year. The company's main product lines achieved rapid growth in operating income, consolidating its leading position.
2022Q1's operating income was 431 million yuan, an increase of 14.94% over the same period last year, and its non-net profit was 1120.97 million yuan, down 14.58% and 22.31% respectively over the same period last year.
Based on orthopaedics, actively promote the development of innovative consumables production line. In 2021, the company's operating income of trauma products was 1.128 billion yuan, an increase of 14.97% over the same period last year, and the gross profit margin was 86.26% (- 1.46pcts). The company's intramedullary nail system and other three products all won the bid for orthopaedic trauma supplies in 12 provinces of Henan Province in July 2021. The revenue of spinal products was 565 million, up 53.14% over the same period last year, and the gross profit margin was 88.02% (- 1.74pcts). The company acquired Beijing Anders Kopp, a consumable company for intervertebral foramoscopy equipment and supporting instruments, to further speed up the overall layout of the spinal product line; the revenue of minimally invasive surgical products was 150 million yuan, up 34.20% over the same period last year; and the income of neurosurgical products was 44 million yuan, up 14.93% over the same period last year. Joint production line, hip joint and knee joint product system have won the bid for volume procurement in artificial joint countries. The company continues to consolidate its advantages in the field of trauma and spine, and continues to deepen its layout in the fields of joint, minimally invasive surgery and dentistry, creating a diversified product line with broad prospects for long-term development.
Research and development investment continues, the product line continues to enrich. The company's new product research and development efforts continue to increase, and the research and development costs of 2021 and 2022Q1 are 167 million yuan respectively, an increase of 30.5% and 51.92% respectively over the same period last year. The company has obtained a total of 667 registration certificates, and there are currently 255 registration certificates under application. The number of R & D personnel increased from 416 in 2020 to 523 by the end of 2021. The company's joint production line has successively obtained three types of registration certificates, including hip prosthesis (high cross-linking), ceramic lining and ceramic ball head products. In the dental production line, the company has obtained three types of registration certificates of the implant system, and the materials and surface treatment technology of the implant system are in the leading level in China.
The expense rate is rising and the cash flow is performing well. The overall expense rate of the company in 2021 increased by 2.60% year-on-year, of which the rates of sales, management, R & D and financial expenses were + 1.19%, 0.64%, 0.31% and 0.46%, respectively. The overall expense rate of 2022Q1 increased by 7.36% year-on-year, of which the sales, management, R & D and financial expense rates were 0.60% higher than the same period last year. In 2021, the company's operating net cash flow was 673 million yuan, an increase of 21.14% over the same period last year. The operating net cash flow of the company was-111 million yuan, an increase of 740.18% over the same period last year, and the cash flow performed well.
Risk factors: collection and bidding price reduction risk; company distribution model outdated risk; raw material supply risk.
Investment suggestion: the company is a leader in orthopedic high-value consumables in China, and is a leader in minimally invasive surgery and dentistry. Taking into account the short-term impact of volume procurement and the increase in the company's equity, the company's EPS forecast for 2022-2023 is 1.76max 2.09 yuan (the original forecast is 2.49 yuan 2.14 yuan). The new 2024 EPS forecast is 2.45 yuan, and the current price corresponds to PE20/17/14 times. With reference to South Micromedicine, Zhenghai Biology and other high-value consumables subdivisions, the average PE in 2022 is 30 times, giving the company 30 times PE, corresponding to the target price of 53 yuan. Maintain a "buy" rating.