TAVR continues to perform well, and neurological intervention continues to grow at a high rate; maintaining “buying”
Peppert announced that it achieved revenue of 251 million yuan in 2022 (+83.7% yoy) and a net profit loss of 408 million yuan. The main reason the company achieved high growth on the revenue side was the impressive performance of the TAVR/neurointervention sector: 1) TAVR admissions progressed well, and second-generation products continued to be released with excellent product strength (the company implanted 1,200+ units in '22); 2) the neurointervention sector continued to grow rapidly (+52% yoy). Considering elective surgical repair in '23 and feedback on the company's outstanding second-generation products, we are optimistic that the company's TAVR market share will exceed 20% in '23; when combined with the official launch of new products in the neurointervention sector, we forecast the company's revenue of 4.7/79/1.47 billion yuan in 23-25.
Using the DCF valuation method (assuming WACC 10.3%, with a sustainable growth rate of 1.5%), we maintain Pega's HK$14.86 target price and “buy” rating.
TAVR: Inpatient volume and cost optimization go hand in hand. I am optimistic that sales will continue to improve in 23 years, and the TAVR sector will achieve revenue of 107 million yuan (yoy +156%) in '22. Mainly because the company's first-generation and second-generation products were successfully admitted and released rapidly. Looking ahead to 23, we expect the company's TAVR business to continue to grow at a high rate, mainly because we are optimistic: 1) elective surgical volume repair+regional medical insurance coverage in 23 will stimulate industry penetration; 2) the combination of direct sale+distribution models will drive rapid admission and release of products; 3) the company's second-generation TAVR products have both radial support and recyclability, and superior product strength will drive the market rate to rise; 4) supply chain and production optimization continue, and operating efficiency is expected to improve further. Furthermore, the company's research pipeline is progressing smoothly:
1) The third-generation TAVR TaurusNXT is in the multi-center registered clinical stage; 2) TaurusWave's FIM stage; 3) the TaurusApex polymer valve animal testing stage; 4) The company indicates that Trilogy is expected to launch a registered clinical trial in '23. We expect it to obtain evidence in the US/China in 24/25, respectively.
Neurointervention: The release of new ischemia products began, and the revenue structure of the neurointervention sector gradually diversified to achieve revenue of 144 million yuan (+52% yoy) in 2022. The growth was mainly led by the Tethy middle guide tube and the Jasper SS intracranial electrolytic spring ring. We predict that revenue from the neurointervention sector is expected to impact 50% YOY in 2023. The main reasons are: 1) hemorrhagic products (revenue +10% yoy in '22, sector revenue accounting for 39%) are optimistic that market share will increase after spring ring collection, and revenue growth will remain steady; 2) ischemic products (revenue of +103% yoy in 22, accounting for 28% of sector revenue) are optimistic that the four new products launched in '22 will be officially released within 23 years after the admission period; 3) vascular access products (22-year revenue +100% yoy, sector revenue accounts for 100% yoy, sector revenue accounts for 20% yoy) (Compared to 33%) Optimistic The next generation of microguide wires (registration application stage) will be launched within the year.
TMV/TTV: Research pipelines are progressing smoothly. We are optimistic that they will be listed one after another after 2024. We estimate that Pegia II/Tricuspid Valve Pipeline is expected to impact sales of nearly 2 billion yuan in 2030, driven by:
1) The multi-center registration clinical stage of HighLife (transatrial mitral valve replacement) (the company guides the estimated enrollment of 110 patients in China); 2) Geminione (self-developed mitral valve repair system) performs registered clinical trials in China (the company guidelines anticipate enrolling 120 patients); 3) MonarQ (tricuspid valve replacement) is in FIM clinical trials; 4) Sutra is in animal testing.
Risk warning: Risks related to hospital treatment volume, slow increase in TAVR market penetration, R&D risks.