Performance review
1H22 performance is in line with our expectations
The company announced 1H22 results: revenue of 119 million yuan, an increase of 130% over the same period last year. The net loss of homing narrowed to 91.99 million yuan compared with the same period last year. The income and loss are in line with our expectations.
Trend of development
TAVR (transcatheter aortic valve replacement) accelerated volume release. 1H22 revenue from this business is 52.1 million yuan (+ 455% compared with the same period last year). We expect the company to plant 470-480 units in January-June, and the company says that it will reach 619 in January-July 2022, and the monthly planting volume shows a stable upward trend. By the end of July 2022, the company's TAVR products had entered a total of 209 hospitals, compared with 114 more at the end of last year.
The growth of the company's implantation volume mainly comes from the opening of new hospitals, and the company promotes the growth of the whole market with a wide coverage strategy. Management maintains the guidance of 12-15% TAVR market share for the whole year. In addition, in May, the Shanghai Medical Insurance Bureau included TAVR consumables in the scope of health insurance (reimbursement 75-80%), and the Beijing Medical Insurance Bureau announced in July that the DRG payment method for innovative devices was excepted. We believe that the policy side's support for products with real technological innovation and clinical benefits is becoming increasingly clear, and we look forward to various favorable policies to accelerate the release of domestic innovative devices represented by TAVR.
There was a steady growth of neural intervention. The 1H22 revenue of this business is 66.7 million yuan (+ 58% compared with the same period last year), mainly due to the volume of products such as intermediate guidance catheter and intracranial balloon dilatation catheter. In July 2022, the company won the bid in the second group of spring coil collection in Jiangsu and Fujian provinces, and the multi-provincial alliance collection led by Jilin has also been launched. we believe that domestic enterprises, including the company, are expected to be admitted to hospital quickly under a relatively mild price decline and first realize the domestic substitution logic on the product of spring coils. In addition, in the first half of 2022, the company has been approved to obtain bolt stents, suction catheters, transport balloon dilatation catheters and balloon guide catheters. The rapid prototyping of ischemic line products is about to begin the process of commercialization.
Many products under research are worth looking forward to. The third-generation TAVR, TaurusNXT with non-aldehyde cross-linking technology is in a multicenter registered clinical trial; the FIM trial of shock wave calcification remodeling product TaurusWave is under way; and the technology transfer of TaurusTrio, a reflux product introduced by JenaValve, is progressing smoothly, and the company expects to enter the registered clinic in China in 2023. In addition, the research and development of mitral valve replacement HighLife (scientific and clinical stage), polymer valve TaurusApex (animal trial), mitral valve clip GeminiOne (preclinical preparation) and tricuspid valve replacement MonarQ (FIM preparation) are all progressing smoothly. We believe that the company's product layout in the field of heart valves has leapt to the leading position in China.
Profit forecast and valuation
We keep our profit forecast for 2022 Universe 23 unchanged. We maintain our outperforming industry rating, but considering that the Hong Kong stock medical device sector is in the adjustment stage, we cut our DCF-based target price by 17% to HK $9.55, which is 49% upside from the current share price.
Risk.
Failure of research and development, deterioration of competition pattern, less-than-expected commercialization of new products, collection and reduction of prices.