Key points of investment
Incident: The company achieved revenue of 433 million yuan in 2022 (+8.26%, indicating the year-on-year growth rate, same below), net profit of 185 million yuan (+10.02%), and net profit of the return mother of 173 million (+7.29%) after deduction.
2023Q1 achieved revenue of 109 million yuan (-7.35%), net profit of 53 million yuan (-2.95%), and net profit of 53 million yuan (-2.71%) after deducting net profit of non-return to the mother. The full year of '22 and the short-term performance of 23Q1 were under pressure due to the impact of the pandemic, which is in line with our expectations.
Research pipelines are gradually being enriched, and innovation drives the company's long-term steady development. In 2022, R&D expenses were 38 million dollars (+6.74%). In 2022, the company's self-acidifying adhesives, active biological bone, and hard brain (spine) membrane patches were approved for listing in China one after another, further expanding the company's product lineup. In February 2023, the company's R&D project “Uterine Repair Membrane” completed the first random enrolment of test subjects and officially entered clinical trials.
It is expected that the national dental implant collection will be carried out one after another in Q2, focusing on opportunities for accelerated import substitution of related supporting consumables. On January 11, systematic collection of dental implants produced proposed selection results. The average winning price of the proposed products dropped to more than 900 yuan. Compared with the median purchase price before collection, the average drop was 55%. This collection brought together demand from nearly 18,000 medical institutions across the country, reaching 2.87 million implant systems, accounting for about 72% of the annual number of dental implants in China (4 million). Sichuan Province announced that dental implant collection will begin on April 20. We believe that with implant collection, the increase in surgical volume will benefit the company's use of oral repair membranes and bone repair materials and increase its market share.
Profit forecasting and investment ratings: Considering that the pandemic has put pressure on the company's short-term performance, we adjusted the 2023-2024 net profit of 295/400 million to 236/311 million, the 2025 net profit to the mother was 404 million. The current market value corresponding to 2023-2025 PE was 35/27/21 times, respectively, maintaining the “buy” rating.
Risk warning: Risk of falling factory prices exceeding expectations after collection; risk of new product promotion falling short of expected risks; recovery in surgical volume falling short of expected risks, etc.