Text | joy
Source | Invest in Net East Forty Capital
If nothing else, the A-share market will usher in the largest IPO in 2022. Many people have high hopes for this company, believing that in the field of medical imaging, it is one of the most promising breakthroughs in foreign companies.
In the field of medical imaging, GPS (GE Medical, Siemens, Philips) has always been the three giants that dominate the market, and in the high-end market of 3.0T MR equipment monopolized by GPS, it is understood that only a local company in Lianying Medical currently occupies 17.1% of the share, and GPS together accounts for 82.3% of the market share.
Obviously, Lianying Medical shoulders the heavy responsibility of domestic substitution. According to public information, Lianying Medical plans to issue no more than 115 million shares and intends to raise 12.48 billion yuan; once the listing is successful, the valuation will exceed 100 billion. The joint film medical plan will use the intensive funds of the listing institute for research and development, industrialization of high-end medical imaging equipment, marketing and other projects.
With a revenue of 5.76 billion yuan in one year, it is the largest medical imaging company in China
Lianying Medical is a medical device provider such as medical imaging equipment, and its main business is the sale of equipment. According to the prospectus, the company's products include magnetic resonance imaging systems (MR), X-ray computed tomography systems (CT), X-ray imaging systems (XR), molecular imaging systems (PET/CT, PET/MR), medical linear accelerator systems (RT) and life science instruments.
By the end of 2021, the company has launched more than 70 products to the market, including the industry's first PET/CT product with 4D full-body dynamic scanning function, the industry's first 75cm aperture 3.0TMR product, and the industry's first diagnostic CT-guided integrated radiotherapy accelerator.
Founded in 2011 and headquartered in Shanghai, United Pictures Medical has been established for just over 11 years and is a proper technology-based company.
The company's two core figures, Xue Min and Zhang Qiang, are two PhD alumni of Case Western Reserve University in the United States. The actual controller Xue Min graduated from Fudan University with a bachelor's degree in physics, a master's degree in magnetic resonance physics from the Wuhan Institute of Physics and Mathematics, Chinese Academy of Sciences, and then studied abroad in 1988 and obtained a doctorate degree in biomedical engineering from Case Western Reserve University/Cleveland Medical Center; while Zhang Qiang, chairman, general manager and CEO of the company, has a bachelor's and master's degree in biomedical engineering from Shanghai Jiaotong University and a doctorate degree in biomedical engineering from Case Western Reserve University. Both are top academics and experts in medical imaging equipment.
At the same time, the core management team is also mostly from technical backgrounds, according to the prospectus, the company has a total of 12 senior management personnel, of which 9 are from imaging-related majors. Among the 4833 employees, 1721 have master's or doctoral degrees, accounting for more than 35%; R&D personnel account for 37.35% of the company's total employees; and the proportion of master's and doctoral degrees in the R&D team is close to 95%. From management to research and development, the company has revealed a "technology first" atmosphere.
Such a company, of course, will not be stingy in research and development investment. According to the prospectus data, from 2018 to the first half of 2021, the company's research and development pointed out that the proportion of revenue accounted for an average of 21.7%, which is in the leading position among domestic medical equipment companies. In three and a half years, the company has invested more than 2.3 billion yuan in research and development, which shows the importance of innovation to the company.
The reason why Lianying has invested so much in research and development is actually very simple: medical imaging equipment is the segment with the highest technical barriers in the medical breath industry, and China's medical imaging market was once monopolized by foreign companies. In this field, the market share of foreign capital once exceeded 90%, and Siemens, Philips and General GE still hold more than 70% of the market share of high-end imaging equipment. Like semiconductors, high-end manufacturing and other technical fields, the backwardness in development can only be compensated by increasing investment.
Of course, the high investment of Lianying has also brought good returns to the company. In 2020, the epidemic prompted a sharp increase in demand for imaging equipment, and the company's revenue directly increased from 2.98 billion in 2019 to 5.76 billion, an increase of nearly 100%; at the same time, the performance also quickly turned into a profit, achieving a net profit of 903 million. In the first half of 2021, the company completed a net profit of 647 million, and if nothing else, the company's profit will also achieve rapid growth in the whole of 2021.
More importantly, Lianying Medical has become the absolute leader of domestic imaging equipment. According to the number of new sales units, in 2020, Lianying has become the largest MR and CT manufacturer in China, the new market share of PET/CT and PET/MR equipment has ranked first, and the new market share of DR and mobile DR products has ranked second and first respectively.
The per capita share of domestic traditional imaging equipment still has room for improvement, and the per capita ownership rate of high-end molecular imaging equipment is much lower than that of developed countries, and there is also a large logic of high-end replacement and domestic substitution, with the continuous development of the medical imaging market, the future of Lianying is full of imagination.
In 2021, we will attend an academic conference on average once a day
In 2019, Xue Min, the actual controller of Lianying Medical, once said in the open market, "In the special industry of medical equipment, only by adhering to independent innovation can there be a way out." Many friends will subconsciously smile when they see this kind of talk, but I think that Lianying Medical is seriously practicing this sentence.
The so-called domestic substitution, independent innovation, has never been easy to achieve, the shareholders of Lianying Medical have a lot of background from state-owned assets can also prove one or two, many friends often can not look up to the so-called "milk big" enterprises, but look at the macro, this is China can overtake the curve as soon as possible.
What is important is whether companies such as Lianying Medical can afford the heavy responsibility of domestic substitution.
Judging from the information given in the prospectus, there is at least one thing that is beyond doubt: the company re-researched and developed. As of the reporting period, United Shadow Medical had nearly 2,000 R&D personnel, accounting for more than 35% of the total number of employees, of which more than 1,700 had master's or doctoral degrees, and more than 350 had overseas education backgrounds or work experience.
As of June 30, 2021, the company has a total of more than 2,300 authorized patents, including more than 1,100 domestic invention patents and more than 380 overseas invention patents, accounting for nearly 70% of the total number of patents.
One of the more interesting aspects of the prospectus is that Lianying Medical is improving its market influence and promoting sales revenue by participating in some high-end academic conferences, such as the China International Medical Equipment Fair (CMEF), the annual meeting of the Chinese Medical Equipment Association, and the annual meeting of the North American Radiological Society (RSNA).
In the prospectus, from 2018 to the first half of 2021, the company participated in 214 exhibitions and academic conferences, 296, 281 and 182 respectively. Among them, despite the repeated epidemics, there are especially many activities to participate in in 2021, which is equivalent to participating in an academic conference on average every day, with an average cost of 226,000 yuan.
2021 China's largest unicorn of medical devices
After talking about Lianying Medical itself, I would also like to talk about the company's financing history.
The financing history of Lianying Medical is not high-profile, the only time it publicly announced the financing news was the 3.333 billion yuan A round of financing in September 2017, with a post-investment valuation of 33.33 billion yuan, this round of financing was jointly led by Chinese Life Health Fund and SDIC Innovation Investment Management Co., Ltd., and jointly funded by Investment Institutions such as China State-owned Capital Venture Capital Fund, CICC Zhide, CITIC Securities, CDB Kaiyuan, and CMB Telecom.
This financing set a record for the largest financing in China's medical device industry at that time, and Lianying Medical was known as a unicorn. In 2021, in the "2021 Global Unicorn List" released by The Hurun Research Institute, Lianying Medical ranked first in the list of medical device unicorns in China.
Judging from the data on Tianyancha, Shanghai Lianhe invested in Lianying Medical in May 2017 and was also its first batch of investors. Now Shanghai Lianhe is the company's second largest institutional shareholder, holding 16.38% of the shares. It is worth mentioning that Shanghai United is affiliated with the investment platform under the Shanghai Municipal State-owned Assets Supervision and Administration Commission, and was once the largest shareholder of United Shadow Medical.
Interestingly, 2017 was a year of intensive financing for Lianying Medical, with a total of 3 rounds of financing. This was followed by a round of melting in 2018 and 2020.
In its long list of shareholders, a large number of national teams have appeared, and state-level large funds such as China Development Bank, State Investment, and State Venture Capital, as well as local state-owned funds such as Hubei Science and Technology Investment and Yueke Xintai are among them. It is not difficult to see from the register of shareholders the importance that the state attaches to domestic substitution in this field.
Being invested by state-owned assets and then undertaking high subsidies has also become one of the risks that many people think - it has also been written into the prospectus by United Pictures Medical. During the Reporting Period, the amount of government subsidies included in the Company's other income was $233 million, $306 million, $348 million and $207 million, respectively. In 2020 and the first half of 2021, the company received government subsidies as a relatively high proportion of total profits, 30.11% and 27.34% respectively.
But I still don't think that's a decisive factor in whether a company is a good company or not. Domestic substitution is a long way to go, for VC/PE, the most important thing is always how to invest in the right enterprise in the right window period. As many people say, "The problems that can be solved with money are not problems.""
In the card neck area, a sentence in the open letter issued by Xue Min in the A round of financing is worthy of everyone's deep thinking, "Bill Gates once said: 'The distance between Microsoft and bankruptcy is always only 18 months', then, I want to say that United Pictures is never half a step away from failure." ”