Du Xiangyang of Southwest Securities Co., Ltd. recently conducted a research on Haitai Xinguang and released a research report "23Q2 Performance under Pressure, Order Delivery Subject to Short-term Fluctuations". This report gives a buying rating to Haitai Xinguang, believing that its target price is 63.90 yuan, the current stock price is 49.99 yuan, and the expected increase is 27.83.

Haitai Xinguang (688677)

Investment Points

Event: The company released its third quarter report for 2022, with revenue of 0.22 billion yuan (+20.3%), net profit attributable to parent of 59.85 million yuan (+48.1%), net profit attributable to non-parent of 50.09 million yuan (+65.2%) and net operating cash flow of 94.71 million yuan (+70.6%).

The impact of the outbreak weakened and the recovery in the third quarter exceeded expectations. Excluding share-based payments of $47.74 million, the endogenous net profit was $0.1 billion (+15.3%), an acceleration from the first half of the year. Quarterly, 22Q1/Q2/Q3 single-quarter revenue was 0.66/0.75/0.08 billion yuan (-26.3%/-3.6%/-35.5%), the second quarter was affected by the epidemic prevention and control, the impact of the epidemic weakened in the third quarter, the growth rate recovered more than expected. Profitability, the first three quarters of gross margin of 89.7 (+1.5pp), mainly due to changes in revenue structure, high gross margin products accounted for an increase, if excluding share-based payments, endogenous net profit margin of 45.8, to maintain a high level.

Core product, prosthetic heart valves, continues to lead growth. By business, the first three quarters of heart valve replacement and repair treatment, congenital heart disease implant interventional treatment, surgical soft tissue repair three sectors revenue increased by 27%, 18.6, 13.9, respectively, of which, artificial heart valve revenue of 67.96 million billion yuan, an increase of 428, continue to lead the company's growth.

continue to increase research and development, in the research products in an orderly manner. In the first three quarters of 2022, the company's research and development costs were 44.6 million yuan, accounting for 20.2 percent of revenue, and continued to increase the potential pipeline of research and development layout. The company's core research products in the orderly promotion, in the field of heart valve repair and replacement, interventional valve in the valve Renato.®and ball expansion TAVRRenatus®Clinical trial enrollment was completed in March-April and product registration is expected to be submitted in the second quarter of 2023; Renatus®The upgraded split-type interventional aortic valve system is expected to complete animal experiments and registration tests by the end of the year, and is expected to start clinical 2023H1. In the surgical soft tissue repair section, ophthalmic biological patch will officially carry out clinical trial research in May 2020. All patients will be enrolled on April 7, 2022. In the first half of the year, 4 patients will complete one-year follow-up and are expected to be registered before Q2 2023. The company's vascular biological patch has completed the patient's enrollment, has completed the conclusion, and is expected to submit the registration declaration in September 2022. In the field of congenital heart disease implantation intervention, the stentless biological valve with valve pipeline is currently supplementing the registration review data, the complex cardiac valve with valve patch is preparing for registration and declaration, and the Salus interventional pulmonary valve and delivery system is expected to complete patient enrollment by the end of 2022. In addition, the company has a number of products in the clinical or design stage, huge in the research pipeline orderly promotion to support the company's long-term development.

Earnings Forecast and Rating: Considering the impact of equity incentive fees, it is estimated that the net profit of the parent company in 2022-2024 will be RMB09, 1.5 and RMB0.19 billion. As an innovative leader with animal-derived plant intervention materials as a platform, it has great potential in the future and maintains a "buy" rating.

Risk Warning: Risk of R & D failure, lower-than-expected sales, repeated outbreaks, and increased competition.

the securities star data center calculated according to the research report data released in the past three years that the research team of Zhu Guoguang of soochow securities has conducted in-depth research on the stock. the average forecast accuracy in the past three years is as high as 96.67. its forecast net profit for 2023 is profit 0.228 billion, and the forecast PE converted according to the current price is 26.67.

The latest profit forecast is as follows:

the stock has been rated by 21 institutions in the last 90 days, with 14 buying ratings and 7 overweight ratings; the average institutional target price in the past 90 days is 70.86.

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