After 17 years of deep cultivation of bone materials, the technology path is the best in the world, and it has entered a period of rapid development of performance. Aojing Medical was founded in 2004. The core team comes from Tsinghua. The core products are bone repair materials. The company's technology path is the best in the world, and it has established an in vitro bionic mineralization technology platform with complete intellectual property rights. The core products have obtained multiple FDA, CE and CFDA registration certificates, and are used in more than 300 major hospitals in China, and are highly recognized. After decades of academic promotion and accumulation, the company's revenue and profit have entered a stage of rapid growth. From 2018 to 2020, the operating income/net profit CAGR of returning to the mother was 26.22%/54.78% respectively.
The industry will enter a period of rapid growth, and a 100 billion market will be visible within 5-6 years. The market size of bone repair materials in China will be about 5 to 6 billion yuan in 2020, and the terminal scale is close to 50 billion yuan. The localization rate of the industry is low, and the average localization rate is less than 20%. The company is the absolute leader among domestic enterprises. In the context of collecting orthopedic joints and other products, doctors are more motivated to use artificial bone to replace autologous bone or allogeneic bone. The penetration rate of artificial bone overseas is over 50%, and domestic artificial bone is less than 30%. Furthermore, the dental and aesthetic industries are growing rapidly, and the artificial bone market CAGR is expected to maintain a 20% growth rate in the next five years. Within 5 to 6 years, a 100 billion dollar market can be seen, and the size of the factory caliber will exceed 10 billion yuan.
The “orthopedic+stomatologic+aesthetic+neurological” four-wheel drive, R&D pipelines provide follow-up power. The company has a complete product line, and its core products have the advantages of good biocompatibility and high osteogenesis rate. After the company goes public, it will continue to increase sales investment, and revenue from the four major sectors will accelerate significantly. In particular, the dental and neurological fields are expected to gain strength. Furthermore, the company's products have been sold globally since 2018, and revenue of 3 million yuan was achieved in the US in 2019. The company also has major products such as next-generation mineralized bone, 3D printed skull bones, artificial skin, and collagen sponges in the research pipeline. Among them, a new generation of mineralized bone has already entered clinical practice, and the process and composition have been improved again, which is expected to further widen the gap with peers.
Profit forecast, valuation and rating: The company is a global leader in bone restoration materials, with the best technology path in the world and rich R&D pipeline products. The core products have passed the academic promotion period and have entered a period of rapid start-up, and will fully enjoy the high growth in orthopedics, stomatology, medical aesthetics and other industries. The company's EPS for 21-23 is estimated to be 1.04/1.46/1.98 yuan, and the current price corresponds to 21-23 PE of 85/60/44 times. Combining the PE relative valuation method, FCFF and APV absolute valuation method, the target price was 124.41 yuan, corresponding to 120 times PE in '21. It was covered for the first time, and a “buy” rating was given.
Risk warning: New material development risk, overseas sales risk, risk of new product commercialization being blocked, and risk of large fluctuations in sub-IPO stock prices.