Performance review
Semi-annual report 2022 results are in line with our expectations
The company announced its semi-annual report for 2022: revenue of 76.71 million yuan, year-on-year + 154.6%, of which revenue from new products was 3.78 million yuan; gross profit margin was 66.3%, year-on-year + 3.1 ppt; net loss of 66.99 million yuan, loss reduction of 26.69 million yuan, in line with our expectations.
Trend of development
Commercialization and pipeline development are progressing smoothly. In the first half of 2022, the epidemic affected that some of the company's new products could not be commercialized as scheduled, but the company still achieved revenue of 76.71 million yuan, + 154.6% year-on-year, a sustained high growth trend. In the first half of 2022, six new products were approved by NMPA, and a total of 15 nerve interventional devices were approved. Two products of intracranial nerve drug-eluting balloon and vascular remodeling stent in the pipeline received NMPA priority approval, with a complete product portfolio and continuous iterative competitiveness.
Extensive sales channels and stable supply chain. The company has a sales team of 100 + people and 100 + dealers, covering about 1 million terminal hospitals in 31 provinces (municipalities directly under the Central Government and autonomous regions). At the same time, the company has carefully built academic exchange platforms such as "Wei Lai Academy" and "Jingbang Lun Tao" to establish a good brand image and influence. We expect that with the launch of new products in the second half of the year, the coverage of the sales network will be further expanded. On the supply side, the company has nearly 10,000 square meters of production and testing sites, and continuous production capacity construction, stable channels and sufficient reserves of raw materials.
Create a complete solution and innovative R & D platform for cardiac intervention, with sufficient reserves for long-term growth. At present, the company has laid out in the field of cardiac intervention: atrial fibrillation treatment and stroke prevention, mitral and tricuspid regurgitation / stenosis, heart failure, cardiovascular intervention robot. At the same time, there are also lung intervention products. In the first half of 2022, the R & D expenditure was 60.91 million yuan, which was + 88.0% compared with the same period last year. At present, there are more than 30 pipelines, more than 200 patent applications, and 100 R & D engineers.
Profit forecast and valuation
Keep profit forecasts for 2022 and 2023 unchanged.
Maintain the outperform industry rating, but due to the recent systematic adjustment in the pharmaceutical sector, we have lowered our target price by 16.7% to HK $50.00 (corresponding to 8.1 times 2026 forward price-to-earnings ratio), which is 43.3% upside from the current share price.
Risk.
Product research and development failure; clinical trial failure; product registration delay or failure to complete; market competition; sales below expectations; product price reduction; product quality; government regulation or guidance change; intellectual property litigation; financing difficulties; government subsidy cancellation; equity dilution; turnover.