This report is read as follows:
The company is a domestic joint leader, the impact of collection has been a basic response, the future is expected to continue in the new base on high growth, the first time to cover, to increase the rating.
Summary:
Cover for the first time and give an overweight rating. The company is a leading domestic joint enterprise. in the post-collection era, it is expected to continue high growth on the new base and return to the growth center of 30%. It is predicted that the EPS for 2023-2025 will be 0.23x0.32max 0.41 yuan. With reference to the valuation of the comparable company, it will give the 2023 target PE 38X a target price of 8.78 yuan, equivalent to HK $9.60, covering for the first time and giving an overweight rating.
If the quantity is exchanged with price after harvest, the renewal of the contract is expected to benefit. Joint national mining has been implemented one after another during the 2022Q2 period, and the company's 2021H2 provides discount provisions for channel inventory, and the 2022H2 income that fully reflects the impact of collection is only slightly lower than that of 2022H1 and 2020H2 before the epidemic, and realizes a smooth transition of income in exchange for price. Due to the high 2022H1 base, the growth rate of 2023H1 is expected to slow down from the same period last year, while the growth rate of 2023H2 is expected to increase from the previous year.
Compared with other consumables that have not yet been collected or have not been fully landed, policy uncertainty has been basically eliminated, and the valuation center is expected to be improved. It is expected that the national mining of 2023H2 joint will be renewed. With reference to the recent collection rules and results, the price of each enterprise may be more concentrated when the contract is renewed, and the first winning price of the company is lower, which is expected to benefit.
There is a broad space for the joint market, and there is a bright future in the post-collection era. Joint is one of the fastest growing orthopedic implant subdivision tracks. At present, the domestic surgical penetration rate still has several times to improve compared with overseas developed countries, and it is expected to maintain a high growth rate of 15-20% every year after collection. The company is the leader of domestic joints, with a share of about 14% in 2021, jumping from the third in the market before collection (the first in China) to the first in the market. after collection, it is still expected to continue to gain market share by virtue of good quality, complete product line, strong logistics and distribution capabilities and other advantages. The company is more competitive in the field of joint extra-standard products such as renovation and reconstruction and semi-hip, and the newly certified single condyle in July 2022 is also expected to gradually contribute to the performance increment.
The technology platform is constantly upgraded to create lasting competitiveness. The company has profound technology accumulation in the field of orthopaedic technology platform, and is the first company in China to apply 3D printing technology to bone and joint replacement and spinal replacement implants. with 3D printing standardization and customized products to enhance competitiveness in the mass market and high-end market, and to cut into spine, trauma and other related tracks. The company also strategically lays out the digital orthopaedic platform, in which the hip navigation system was first approved in December 2022. We believe that the company has the ability to calmly cope with the potential changes in the technical and clinical side in the future, and will maintain its market competitiveness in the joint and even the entire orthopaedic field in the medium to long term.
Risk hint: the epidemic situation is repeated and the contract renewal rules are not as good as expected.