Event: the company announced its 2020 results, with an annual income of 276 million yuan (+ 18.3%) and a net loss of 182 million yuan, which is significantly smaller than the net loss of 381 million yuan in 2019.
In the second half of the year, the volume of surgery quickly returned to high growth, and the net loss narrowed significantly. The company's H1/H2 revenue in 2020 was RMB 102 million, with a year-on-year growth rate of-5% and 38.3% respectively. The volume of surgery affected by the epidemic was under pressure in the first half of the year, and quickly returned to high growth in the second half of the year after the epidemic was under control. From a product point of view, VenusA-Valve income is 272 million yuan (+ 17.2%), accounting for 98.5% of the total income of 3.35 million yuan, accounting for 1.2%, while the contribution of other products is relatively small. It is estimated that about 2200 TAVR surgeries will be completed in the whole year, more than 50% of the same period last year. If the number of humanitarian and commonweal surgeries is excluded, the factory unit price corresponding to commercial implantation is expected to drop to 131500, mainly to expand market share. The unit price has declined in individual regions, so the gross profit margin in 2020 is 82.3%, slightly lower than the 83.5% in 2019. In terms of expenses, the sales and distribution expenses were 135 million yuan (+ 8%), and the administrative expenses were 104 million yuan (- 47.3%), mainly due to 69 million incentive fees and 25 million yuan listing expenses in 2019, and R & D costs of 167 million yuan (- 16.6%). It is mainly due to the incentive fee of 37 million yuan in 2019, the reduction of income growth and superimposed expenses, and the substantial narrowing of the company's losses.
First-mover advantage + channel advantage + product advantage contributes to the volume of TAVR. As the first TAVR product listed in China, VenusA-Valve still occupies the absolute leading share of the market by virtue of the first-mover advantage. From the perspective of channels, by the end of 2020, the company had a professional promotion team of 130 people, 249 hospitals covered (a net increase of 85 over the end of 2019), and the terminal market share remained more than 80% for the whole year. From the product point of view, the company's second generation recyclable TAVR has been listed in China in November 2020, with a combination advantage, while the company's products have more than 5 years of long-term follow-up data support, safe, reliable and effective. The volume of terminal operations of the company's TAVR products continued to grow strongly in the first three months of 2021, with 99 operations in a single week in March, the highest number of operations per week since the product was launched. We expect the company's TAVR implantation to double in 2021.
In addition, the company's TAVR products have been approved to be listed in Colombia, Brazil, the Philippines, Thailand and other countries, and overseas market development can also be expected.
The research pipeline is rich, and the faucet of transcatheter heart valve instruments is about to take off. In recent years, the company has maintained hundreds of millions of R & D investment, in-depth layout of TAVR, aortic valve repair, TPVR, TMVR/TTVR, surgical valves, supporting products and so on. Among them, the products of TAVR in research and development include VenusA-Pro (the third generation TAVR, R & D stage), VenusA PowerX (self-expanding dry valve, animal research stage, VenusA Vitae (ball expanded dry valve, animal research stage. Leaflex, the active valve repair product, is about to enter FIM,CE in China and is in the clinical trial stage. The TPVR product has been approved for special use in the UK in March 2021, and the green channel in the domestic market has been approved and is now ready to register. The exclusive product is in a good situation in the next few years. CE is under registration review and is expected to be approved for listing this year. FDA is in the preparatory stage of IDE and is expected to carry out clinical practice this year. Limbus, the TMVR product, is currently under preparation for FIM, and the domestic progress is ahead of others. Among the supporting products, the CEP device TriGUARD3 has been approved and sold in Europe in March 2020. FDA is in the process of registration application, and the Chinese market has been approved as a green channel. It is expected to be a domestic exclusive product in preparation of registration materials, and the competition pattern is better.
We believe that the company is rich in pipeline research and good cooperation, short-term revenue growth TAVR, long-term view TPVR, TriGUARD3, Leaflex, LimBus and other innovative products will gradually contribute new momentum.
Profit forecast and rating: from 2021 to 2023, the estimated income is 7,13.2 and 2.17 billion yuan respectively, and the net profit is-0.1,3.1 and 780 million yuan respectively. It is expected that the income will grow rapidly in the next few years and gradually make a profit, maintaining the "buy" rating and the target price of 93.20 Hong Kong dollars per share.
Risk tips: product volume is less than expected, R & D failure risk, policy cost control risk.