Some of the interventional devices collected and released contributed to revenue, and performance was growing rapidly:

In '21, the company's total revenue increased 29.6% year on year to 465 million, of which interventional medical devices generated revenue of 436 million yuan, an increase of 63.7% over the previous year, accounting for 93.9% of total revenue. Profitability remained stable, with comprehensive gross profit of RMB 276 million and gross margin of 59.3% in '21. During the period, profit increased by more than 20.5% year-on-year to RMB 140 million, and net interest rate of 30.2%. The company's products have benefited from collection and release volume. Sales of therapeutic products such as imaging guides, imaging catheters, balloon catheters and finger guides have increased by 75% under collection. Overall sales of auxiliary products such as pressure pumps, Y valves, and pressure extension tubes have increased by about 58%. The minimum number of contracts collected in '22 has already exceeded 30 million, an increase of ten times over '21, and the factory price is almost unaffected. Imported raw materials such as PTEF lining pipes and stainless steel wire have basically achieved independent production to cope with problems such as rising raw materials and long supply cycles, and effectively control production costs.

Sales channels are optimized, Pulin Medical helps develop domestic trade, and there is a lot of room for foreign trade to develop:

By the end of '21, the company had Chinese distributors covering 23 provinces, 4 municipalities directly under the Central Government and 5 autonomous regions in China, covering a cumulative total of 2,100 hospitals in China, and 184 overseas customers in 51 countries and regions. Revenue from domestic trade of interventional products increased by more than 80% in '21, mainly due to the introduction of a new domestic trade sales team in '21 and integration with the existing sales team, and the establishment of a new domestic sales platform, Shanghai Pulin. The overall year-on-year increase in foreign trade was about 15% (excluding commissioned export revenue). The company is expected to achieve more than 30% growth in foreign trade sellers in '22, and foreign trade sales are expected to reach 500 million in the next three years.

R&D is progressing steadily, registration certificates have been approved one after another, and production capacity is about to be released:

R&D expenditure in '21 was approximately RMB 110 million, a year-on-year increase of 65.9%, of which approximately RMB 1985 million was capitalized. The company obtained 8 Class III registration certificates and 3 Class II registration certificates in '21. It is expected to obtain 9 Class III certificates and 6 Class I certificates in '22. By the end of '21, it had a total of 189 registered patents, 166 pending patents, and 5 registered software works. A total of 12 products were in clinical trials in '22. It is expected that the FIM test for TAVR dual indications (reflux and stenosis) will be completed in the first half of '22. Frost Sullivan expects the scale of TAVR products in China to reach 6.33 billion yuan; recently certified orthopedic stem cell products have completed applications for medical insurance codes. There are no similar products in the market, and it is expected that they will contribute more than 60 million in revenue in the next three years; magnesium alloy degradable scaffolds are expected to enter the human testing stage by the end of this year. The unique magnesium alloy material overcomes the problems of strength and rapid degradation rate; peripheral intervention products are highly compatible with the company's coronary product line. Peripheral microguide wires and microconduits, and peripheral revenue is expected to grow rapidly.

Give it a “buy” rating, with a target price of HK$27.39:

The company has benefited from collection, rapid product release, and new products are being introduced into the market one after another, and are about to enter the harvest period. We adjusted our revenue forecast for 22-24 to 645, 857, and 1,123 million yuan. The corresponding EPS is 1.12, 1.48, and 1.91 billion yuan, corresponding to 15 times the PE forecast in 24, and adjusted the target price to HK$27.39. There is room for an increase of 72.70% compared to the current price, maintaining the “buy” rating.