The domestic electric endoscopic stapler faucet is ready to be released, covering a “buy” rating for the first time
Starting with infant care equipment, David Medical has a stable position as an industry leader. After listing, it strategically laid out the field of high-value medical consumables. In 2018, the independent development of an electric endoscopic stapler was approved for domestic production. The stapler business began explosive growth in 2019. The endoscopic stapler industry is booming, and electric ones are replacing manual ones. We believe that with product quality and first-mover advantages, David Medical is expected to become the leader in electric endoscopic staplers. We expect the company to achieve net profit of 0.90/136/218 million yuan in 2020/2021/2022, an increase of 45.8%/50.5%/59.8% over the previous year. EPS was 0.31/0.47/0.76 yuan respectively. The current stock price corresponding to PE was 64.5/42.8/26.8 times respectively, covering the “buy” rating for the first time.
The release of electric endoscopic staplers is expected to drive a new round of high growth in performance
The domestic stapler market is 10 billion yuan, of which the endoscopic stapler terminal market is 6-7 billion yuan. Conservatively predicts a compound growth rate of more than 20% over the next 5 years. It is estimated that the factory size of endoscopic staplers will exceed 12 billion yuan in 2024. It is an industry trend for electric endoscopic staplers to replace manual ones in the future. The company's electric endoscopic stapler was approved for domestic use in 2018 and released rapidly in 2019. David and Johnson will work with Johnson & Johnson to expand the electric endoscopic stapler market. It is estimated that electric endoscopic staplers will account for about 15% of endoscopic stapler sales in the endoscopic stapler market after 5 years. With product quality and first-mover advantage, David's stapler sales are gaining momentum. The sales revenue of staplers is expected to reach 100 million, 200 million, and 350 million yuan in 2020-2022, and is expected to reach 1 billion yuan in sales volume and a net profit of 4-5 billion dollars in 5 years.
Benefiting from product upgrades, the volume and price of infant care equipment have risen steadily, and the inflection point is clear
The company's traditional baby care equipment volume and prices are rising steadily. Benefiting from product upgrades, the gross margin of traditional childcare equipment will increase steadily. Currently, there are about 200,000 units of infant care equipment in stock. The average product renewal cycle is 7-8 years, with an annual renewal volume of 20,000 to 30,000 units. It is estimated that David Medical's domestic market share will be around 50%. In the future, sales of the company's high-end products such as YP-2008, YP-3000, HKN-93C, and neonatal jaundice treatment blankets will increase steadily. It is estimated that in 2020-2022, the revenue side of infant care equipment will grow at a compound rate of about 10%. The profit growth rate is higher than the revenue growth rate. The inflection point in the traditional infant care equipment sector is clear.
Risk warning: Low product sales expectations; increased industry competition led to product price reductions; low expectations for new product development.