Introduction to this report:
Taking into account the valuation of the industry and comparable companies, as well as the price reduction behavior due to the exclusion risk of high prices during the inquiry process, we expect the issue price range of Tianzhi Air to be 13.72 yuan to 15.36 yuan.
Summary:
Currently, the market has entered the stage of information validity and low price games between institutions. Taking into account the valuation of the industry and comparable companies, as well as price reduction behavior due to the exclusion of risk from high prices during the inquiry process, we expect that the corresponding inquiry range for Tianzhi Air on June 17 will be between 13.72 yuan and 15.36 yuan.
Tianzhihang is a leader in the domestic orthopedic surgical robot industry, and the advantages of third-generation robotics technology are obvious. The company achieved revenue of 230 million yuan (YOY +81.16%) in 2019, the compound growth rate in the past three years was 76.98%, sales of third-generation robots increased, and the company's R&D investment accounted for 30% of revenue in the past three years, forming a high-quality innovative R&D team. Compared with the previous two generations of products, the third-generation “Tianji” robot can be applied to spine surgery and trauma orthopedics. It has reached the sub-millimeter level (<1mm) in terms of clinical accuracy, and is compatible with X-rays, CT, and CBCT. The company is the first “orthopedic robot navigation and positioning system” to obtain a Class III medical device registration certificate issued by the CFDA. Currently, there are no products on the market among similar domestic companies, so the first-mover advantage is obvious. The company has carried out clinical applications in 74 medical institutions across the country, ranking first in sales volume and surgery volume in the field segment. In October 2019, it collaborated with Johnson & Johnson Healthcare to launch an international construction project. The company's fund-raising project will strengthen the company's competitiveness in the future orthopedic surgical robot market.
Based on the above analysis and disclosure in the company's prospectus, based on product or business similarity, we chose Wandong Medical, Yingkang Life, Kaiji Medical, and Mindray Healthcare as comparable companies. Considering that Tianzhi Air's net profit in 2019 was negative and the market sales rate was used for valuation, the comparable company's 2019 market sales ratio was 9.18-21.06 times, and the average was 14.22 times; the predicted market sales rate for 2020 was 7.44-17.19 times, and the average value was 11.02 times.
The static sales rate of medical devices in Shenwan's secondary industry was 0.72-60.46 times (as of June 16, 2020), an average of 16.80 times; while the static sales rate of the Science and Technology Innovation Board in the secondary industry was 9.79-60.46 times, with an average value of 32.30 times. The valuation of science and innovation companies was higher than traditional companies.
Based on the valuation of comparable companies and industries, based on the 2019 operating income disclosed in the prospectus, we gave a valuation range of 25-28 times PS, which is higher than the market sales rate of the industry and the average market sales rate of comparable companies. Based on the estimated total share capital after issuance does not exceed 418.44 million shares, the estimated market value after issuance is 5.739 billion yuan - 6.428 billion yuan, and the corresponding issue price range is 13.72 yuan - 15.36 yuan.
Risk warning: (1) Be wary of rigidly excluding the risk of 10% higher prices and secondary game behavior on the day market quotes. (2) The promotion of core products fell short of expectations.
