Investment logic
After experiencing a period of poor performance, it is expected that the inflection point will rise in the future. As a leader in the domestic hemoperfusion device industry, the company experienced 5 years of continuous high growth with sales revenue growth of more than 30% and profit growth of more than 35% before 2021. Starting in Q3 2022, the company entered a temporary performance adjustment period. Related to factors such as changes in the company's internal sales team, dealer policies, and channel inventory fluctuations, the company returned to a rapid growth trajectory starting in Q1 2024. The performance is expected to rise at an inflection point starting in 2024. Although traditional HA130 products face price reduction pressure, the impact on the company's high profit margin level is limited.
Furthermore, it can be judged from financial indicators such as accounts receivable: issues such as channel inventory have been gradually resolved in 2023, and the company's operations are expected to return to a normal growth trajectory starting in 2024.
The cost for dialysis patients will be reduced, and the frequency of use of hemoperfusion devices will increase. Hemodialysis patients generally use hemoperfusion treatment per month. The penetration rate of hemoperfusion among hemodialysis patients is still relatively low, mainly affected by factors such as regional economy and differences in acceptance levels between doctors and patients. In the future, due to the combined effects of factors such as 1) the promotion and support of hemoperfusion technology by domestic experts in the field of blood purification, 2) the increasing friendliness of policies for hemoperfusion, and 3) the continuous reduction in treatment costs for patients with kidney failure, the frequency of hemoperfusion treatment is expected to increase at an accelerated pace. As a leading domestic company in the field of hemoperfusion, Jianfan will directly benefit.
The iterative superposition of new products and the expansion of application fields contributed to long-term additional growth poles. The company is leading in innovation capabilities in the field of blood purification. In 2019 and 2023, it obtained 2 new products in the field of nephrology, KHA and PhA series, respectively. The new products have significant advantages in adsorption performance, safety, and price compared to traditional HA series products. At the same time, products in the new application field of “liver disease+critical illness” of hemoperfusion devices will also re-enter the accelerated promotion stage in 2024. The potential market space is huge. The share of new products in the company's revenue is expected to gradually increase in the future, driving the company to achieve relatively stable profit margins under the pressure of industry health insurance fee control.
Profit forecasting and investment advice
We are optimistic about the company's development prospects in the field of blood purification. We expect the company's revenue in 2024-2026 to be 32.95, 41.71 billion yuan, 5.130 billion yuan, +71%/+71%/+27%/+23% year over year; net profit to mother of 8.98, 11.48, and 1,434 billion yuan, +106%/+25% over the same period last year. Referring to the comparable valuation situation of listed companies in the same industry, considering the company's future rapid sales growth expectations and leading position in the hemoperfusion device field, the company was given a 30-fold PE valuation in 2024, a target market value of 26.9 billion yuan within 12 months, and a target price of 33.31 yuan/share, and raised to a “buy” rating.
Risk warning
Health insurance fee control policy risks; risk of projects under development not progressing as expected; risk of product promotion falling short of expectations; risk of hospital demand and product usage frequency falling short of expectations;