Events:
On October 25, the company released its quarterly report for 2021, showing that operating income in the first three quarters of 2021 was 1.305 billion yuan, an increase of 17.57% over the same period last year; net profit was 453 million yuan, up 6.05% over the same period last year; net profit after deducting non-return was 410 million yuan, an increase of 6.22% over the same period last year. Operating income and net profit increased steadily in the first three quarters. In the third quarter, the company achieved operating income of 458 million yuan, an increase of 4.86% over the same period last year; net profit of 136 million yuan, down 16.43%; and net profit of 127 million yuan, down 18.78% from the same period last year. Basic earnings per share is 1.13 yuan per share.
Comments:
Revenue maintained steady growth in the third quarter, and R & D continued to make efforts.
Affected by orthopaedic volume procurement, the company's dealers purchased goods in the third quarter, the operating results fluctuated, and the company's operating income growth slowed down in the third quarter, achieving 4.86% year-on-year growth. The gross profit margin is 85.60%, which is basically the same as the same period last year; the net profit margin of sales is 36.14%, which is lower than the same period last year. The management expense rate of the company in the third quarter was 5.20%, an increase of 1.76% over the same period last year, mainly due to salary adjustment and personnel increase and the second phase of consolidation, depreciation and amortization. In 2021, the company awarded 3.1094 million restricted shares to 525 incentive targets, and other payables in the third quarter were 177 million yuan (+ 150.80%), mainly due to the equity incentives granted in the current period and increased repurchase obligations.
Actively promote the integration of research and service, dentistry, minimally invasive surgery and other product lines actively promote the company's R & D investment of 109 million yuan in the first three quarters, an increase of 28.68% over the same period last year. In October 2021, the company was selected into the list of national pilot enterprises for the integration of the two industries of the National Development and Reform Commission, promoting the development of medical device R & D, design and service integration, and creating a domestic first-class R & D, design and manufacturing service integration platform. The company's dental implant brand Baiya Tai has been officially promoted and sold in early 2020, and has obtained good feedback from the market since its launch; in terms of minimally invasive surgery, the laparoscopic single-hole multi-channel operating platform (STARPORT) series developed by the company in cooperation with Southern Hospital of Southern Medical University was successfully listed in 2018 and has been used in nearly 130 hospitals across the country.
Trauma and joint products have won the bid, respectively, and the sales channels have been steadily expanded in July and September 2021. The 12 provinces Purchasing Alliance and the National consumables Collection Center led by Henan Province carry out centralized volume procurement of orthopedic trauma and joint products respectively, and the company's products have won the bid all over the line, and the subsequent provinces will begin to implement them one after another. As of October 2021, the company has nearly 1000 distributors, providing services for 3500 hospitals. Winning the bid is expected to continue to increase the market share of the company's products.
Profit Forecast and Investment rating
We estimate that the company's operating income from 2021 to 2023 will be 2.047 yuan, 25.84 billion yuan, respectively, and the return profit will be 754 yuan, 926 yuan, 1.286 million yuan, respectively, and continue to give a "buy" rating.
Risk hint: the risk that the progress of research and development is not as expected, the sales promotion is not as expected, and the core products fail to win the bid in volume procurement.