Event

The company publishes its annual report 2021 and quarterly report 2022

On April 29, 2022, Elon Technology released its Annual report 2021 and Quarterly report 2022.

In 2021, the company achieved revenue of 389 million yuan (+ 25.60%), net profit of 96 million yuan (+ 33.40%), non-return net profit of 89 million yuan (+ 42.20%) and EPS of 1.32 yuan. In the first quarter of 2022, the revenue was 43.11 million yuan (+ 7.91%), the net profit was-390000 yuan (- 106.67%), the non-return net profit was-1.86 million yuan (- 132.68%), and the EPS was-0.01yuan.

Brief comment

Medical automation industry leader, the performance is basically in line with expectations.

Elon Technology focuses on the field of intelligent management of medical materials, and its main business covers three parts: wisdom pharmacy, wisdom ward and wisdom logistics. In 2021, the company achieved revenue of 389 million yuan (+ 25.60%), net profit of 96 million yuan (+ 33.40%), and non-return net profit of 89 million yuan (+ 42.20%). By the end of 2021, the company's remaining unconfirmed on-hand orders totaled 275 million yuan, an increase of 52.55% over the same period last year, providing a good support for subsequent growth. In the first quarter of 2022, the revenue was 43.11 million yuan (+ 7.91%), the net profit was-390000 yuan (- 106.67%), and the non-return net profit was-1.86 million yuan (- 132.68%). The first quarter usually accounts for a relatively low proportion of the company's annual income, and it is expected that the domestic epidemic will have a certain impact on the company's installation progress; the large fluctuation at the profit end is mainly affected by the tax rebate for software sales.

With the rapid growth of automated pharmacies, Ku-Fa integrated logistics products have been recognized by the market. The company's automated pharmacy plate mainly includes door / emergency automatic pharmacy, static distribution center, out-of-hospital automatic pharmacy series products. In 2021, the company's automated pharmacy sector achieved 279 million yuan in revenue, an increase of 33.2% over the same period last year. Thanks to the high demand brought about by the new medical infrastructure, the sector maintained a trend of rapid growth. The automatic logistics plate includes pneumatic logistics transmission, integrated intelligent allocation library and other systems, which can realize the intelligent transmission, access, inventory management and medical waste materials disposal of drugs and materials in the whole hospital. The revenue of automatic logistics business reached 46.65 million yuan in 2021, an increase of 78.5% over the same period last year. The faster growth rate is mainly due to the market recognition of integrated logistics products and increased demand. Automatic ward products mainly include intelligent subcontracting machines and integrated ward management cabinets used in inpatient departments of hospitals at all levels. The income of this section reached 17.24 million yuan in 2021, down 41.9% from the same period last year.

New hospitals + renovation of old homes, procurement demand for automation equipment brought by new medical infrastructure projects in China since 2020, new medical infrastructure projects have been carried out continuously, the pace of hospital construction has been accelerated, and the reconstruction and expansion projects of new hospitals and old hospitals have increased. From the point of view of the hospital construction process, from the upstream civil construction project and decoration project to the medical special project and hospital automation system in the middle reaches, and then to the medical equipment needed in clinic, each field in turn benefits from the magnificent demeanor brought by the new medical infrastructure. As a leader in the medical automation industry, the company can provide automation solutions for new and old hospitals, including outpatient pharmacies, static distribution centers and inpatient wards, and is expected to continue to benefit from the increased order demand brought about by the new medical infrastructure.

We will continue to increase R & D investment and deepen the layout of automation solutions in the whole hospital. The company invested 39.61 million yuan in R & D in 2021, an increase of 22.86% over the same period last year, accounting for 10.17% of the sales revenue. The fully automatic drug feeding closed-loop transmission device developed by the company connects the automatic warehouse and the drug distribution system to form a circulation closed loop through the carrying equipment, so as to realize the automation of the whole process of tonic, enhance the product competitiveness and increase the sales amount of a single project at the same time. The company is committed to creating a new intelligent medical special engineering model, and after launching the "integrated warehouse and development" scheme for the automatic management of medical materials in the whole hospital, the market response is good, and the scale of individual orders has increased significantly. Only the three "integrated warehouse and development" related projects account for 25% of the revenue, and the follow-up is expected to further obtain the order of the solution of the whole hospital by virtue of technical advantages.

Financial indicators are generally stable, and cash flow is affected by the increase in on-hand orders and the increase in advance payments. In 2021, the company's gross profit margin reached 59.61% (+ 0.64pp), maintaining a steady upward trend. The sales expense rate is 13.81% (+ 0.03pp), the management expense rate is 10.17% (+ 0.17pp), the R & D expense rate is 10.17% (- 0.23pp), and the financial expense rate is-0.68% (- 1.81pp). The overall expense rate is stable during the period. The net operating cash flow of the company in 2021 was 39.75 million yuan, down 66.09% from the same period last year, mainly due to the increase in order-on-hand projects in implementation and the increase in prepaid payments in the fourth quarter.

Issue a buyback plan to demonstrate the company's confidence

On April 29, 2022, the company announced that it intends to use its own funds to buy back shares, all for employee stock ownership plans or equity incentives, and transfer them within three years after the completion of the repurchase. The scale of buyback funds is 0.62-124 million yuan. The repurchase price does not exceed 40 yuan per share. The buyback program reflects the company's management's recognition of the company's value and confidence in future growth, and also helps to improve the long-term incentive mechanism.

In the short term, new medical infrastructure is expected to bring incremental demand for hospital intelligent system construction, and the prosperity of the industry is expected to continue to improve; in the medium to long term, the company continues to increase its R & D layout and launch upgraded products, and the hospital-wide material automation solution of "integration of warehouse and distribution" is expected to further enhance the company's competitiveness.

It is estimated that the company's net profit from 2022 to 2024 will be 1.22,1.53 and 193 million yuan respectively, with a growth rate of 28.1%, 25.3% and 25.5% respectively. Based on the closing price on May 6, 2022 (26.28 yuan), the PE in 2022-2024 will be 17,13 and 11 times, respectively. Cover for the first time and give a buy rating.

Risk hint

If the domestic epidemic continues, the company's installation schedule may be lower than expected; market competition aggravates the risk; industry policy changes.