Recommended logic: the company is the leader of transcatheter heart valve instruments in China. Valvular heart disease is a common structural heart disease. About 210 million patients worldwide suffered from valvular heart disease in 2019, resulting in about 2.6 million deaths and a high incidence in China. It is estimated that there will be 36.3 million patients in 2019. With the improvement of living standards and aging, the need for treatment is becoming more and more urgent. At present, surgery is still the main treatment of valvular heart disease in China, and interventional therapy is the development direction in the future. the company distributes interventional therapy in all fields of aortic stenosis and dysfunction related to pulmonary, mitral and tricuspid regurgitation (i.e. TAVR, TPVR, TMVR and TTVR). Driven by the volume growth of the main listed varieties of VenusA-Valve products, the company's revenue increased from 20 million yuan to 230 million yuan in 2017-2019, with a compound growth rate of 250.2%. Following the gradual launch of second-generation TAVR, TPVR, TriGUARD3 and other products to contribute new momentum, the company's revenue is expected to maintain explosive growth in the future.
The 10 billion-class TAVR golden track is about to take off, and the company's first-mover advantage is expected to continue to benefit. The gold standard of treatment for patients with severe aortic valve stenosis is still SAVR, but thoracotomy is too risky for high-risk patients. Transcatheter aortic valve replacement (TAVR) is a minimally invasive operation with low risk and rapid prognosis. With the promotion of clinical evidence, the indications are gradually broadened. According to the latest international guidelines in 2020, full coverage of severe symptomatic aortic valve stenosis can be achieved based on doctors' evaluation and patients' wishes. In 2019, there were 767000 domestic patients eligible for TAVR surgery, but the number of operations was only 2400, with a penetration rate of 0.3%, far lower than the 23.4% penetration rate of the United States and the global average of 4% in the same period. It is expected that the domestic penetration rate will increase to 4.5% in 2025, and the market size will increase to 5.06 billion yuan. The company's first-generation product VenusA-Valve was first listed in China in April 2017, and the second-generation recyclable TAVR was also listed in China in November 2020, while the company is still actively laying out the next-generation dry valve products Venus PowerX and Venus Vitae, with leading product share, with first-mover advantage and product echelon advantage, and is expected to gain a large share in the 10 billion track competition.
The world's first self-expanding TPVR product with strong certainty in volume. After previous surgical correction in children with complex congenital heart disease (such as TOF), further surgery is needed in adolescence to repair the decline of right ventricular outflow tract function (RVOTD). Compared with surgical surgery (SPVR), interventional surgery (TPVR) has the advantages of less trauma, rapid recovery and low risk, and is expected to become the mainstream treatment of RVOTD. According to Frost&Sullivan, with the listing of the company's VenusP-Valve, the market is expected to expand. The domestic TPVR market is expected to be US $120 million in 2025, with a penetration rate of 10.8%. Compared with potential overseas competitors, the company's TPVR products are more suitable for Chinese patients and are expected to occupy a major share after launch. At the same time, the company is also actively laying out the global market. The European CE logo application was submitted in April 2019 and is expected to be certified in 2021. At the same time, the United States has submitted a clinical trial application (IDE), which is expected to become the first variety of the company's globalization attempt.
Join hands with OPUS to speed up the research and development of TMVR/TTVR and improve the layout of supporting products at the same time. According to Frost&Sullivan statistics, the global number of patients with mitral regurgitation and tricuspid regurgitation will increase to 110 million and 55.9 million respectively in 2025. At present, the standard treatment for severe MR/ TR is thoracotomy for valve replacement or repair. Due to the high risk, not many patients receive surgical treatment, while interventional products are generally immature, a large number of medical needs have not been met. The company works with OPUS to actively promote the research and development of TMVR and TTVR products, which are currently in the design stage of animal research, and are the first echelon layout of TMVR companies in China. At the same time, the company expands the supporting products V8, TAV8 and TriGUARD3 through epitaxial mergers and acquisitions, and the related products are expected to contribute new increments after listing.
Profit forecast and rating. With the expansion of the first and second generation of core products TAVR products, the company's performance is expected to accelerate growth. It is estimated that the EPS in 2020-2022 will be-0.52,0.11,0.71 respectively. With reference to comparable companies, we believe that giving 25 times PS in 2022 has a higher margin of safety, corresponding to the target market value of 34.1 billion yuan, corresponding to the target price of HK $93.20 per share, covering for the first time and giving a "buy" rating.
Risk tips: product volume is less than expected, R & D failure risk, policy cost control risk.