Deeply cultivated in the field of medical devices for nearly 30 years, two major business drivers: monitoring equipment and blood purification. Founded in 1993, the company is deeply engaged in the field of medical devices and is one of the leading domestic monitoring equipment companies, with a sales network all over the world. On the basis of strengthening the monitoring equipment, the company actively improves the strategy of the whole industry chain of nephrology and promotes its market competitiveness in the field of hemodialysis. Affected by the COVID-19 epidemic in 2020, the sales of the company's monitoring equipment increased rapidly, and the export of its products overseas was recognized by customers. In 2021, the company's revenue was 1.091 billion yuan (YOY-22%), with a net profit of 64 million yuan (YOY-82%), of which blood purification equipment and consumables accounted for 61.8%.
The process of domestic substitution is accelerated, and the business prospect of hemodialysis is broad. Blood purification is one of the main treatment methods for patients with acute and chronic renal failure. Hemodialysis is the most commonly used and important blood purification method at present. According to the Fresenius annual report, the global hemodialysis market rose steadily from 66.8 billion euros in 2015 to 82 billion euros in 2020 (CAGR 4.2% in 2015-20). According to the Chinese Medical device Blue Book (2021 edition), the domestic market scale of dialyzer, dialyzer and dialysis consumables is expected to reach 52 yuan, 88 yuan and 6.6 billion yuan respectively in 2025. However, imported products account for more than 70% of the market share in the market for high-value medical consumables for hemodialysis, and there is still broad room for domestic substitution. We believe that based on the growing base of hemodialysis patients, the improvement of patients' ability to pay, the technological progress of hemodialysis products and the strong support of national policies, the domestic hemodialysis industry is expected to maintain steady growth.
The company distributes hemodialysis products in the whole industrial chain, and acquires Suzhou Junkang to expand production capacity. The number of innovative patents of the company is in the forefront of the industry, and mastering the core technology of hemodialysis-related products is expected to benefit from the wave of domestic substitution.
The company is the domestic leader in monitoring equipment, and there is still a lot of room for growth. According to Group Intelligence Consulting, the global monitor market has steadily increased from US $2.68 billion in 2016 to US $2.94 billion in 2019 (CAGR was 3.1% in 2016-19). The spread of the COVID-19 epidemic has led to an increase in demand for monitors, reaching US $3.3 billion in 2020. It is expected that with the advance of epidemic prevention and control and vaccination, the demand for medical equipment will return to the previous steady growth level. The domestic monitor market grew from $330 million in 2016 to $420 million in 2019 (CAGR was 8.4% in 2016-19) and is expected to reach $640 million in 2023. The company has three series of monitoring products: palmtop monitor, integrated monitor and plug-in monitor. The company's monitor series products take advantage of the epidemic opportunity to accelerate overseas; at the same time, catalyzed by the new domestic medical infrastructure policy, company monitors and other life and health monitoring products as the basic equipment in hospital wards, their market demand is expected to increase and achieve accelerated growth.
Profit forecast, valuation and rating: we predict that the return net profit of the company from 2022 to 2024 will be 0.86 million RMB 114pm, respectively, and the EPS will be 0.49pm 0.65pm 0.90 yuan respectively. The current price corresponding to PE is 30-23-17 times. We give the company a target price of 18.10 yuan, covering it for the first time and giving it a "buy" rating.
Risk hints: intensified competition; lower prices than expected; capacity expansion and digestion is not as expected.