Hong Kong Stock Concept Tracker | Favorable policies promote the continuous expansion of demand, and domestic medical equipment companies usher in development opportunities (with concept stocks)

Zhitong Financial APP learned that recently, large-scale equipment renewal work has accelerated, and the medical device industry has welcomed favorable policies. On May 6, eight departments including the National Health Commission issued a notice on the "Opinions on Strengthening the Capacity Building of Critical Medical Services". The opinion proposes that by the end of 2025, the number of intensive care beds in the country will reach 15 per 100,000 people, the number of convertible intensive care beds will reach 10 per 100,000 people, and the ratio of comprehensive ICU beds in relevant medical institutions will reach 1:0.8 and the bed-to-nurse ratio will reach 1:3. By the end of 2027, the number of intensive care beds nationwide will reach 18 per 100,000 people, and the number of convertible intensive care beds will reach 12 per 100,000 people.

With the issuance of the "Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods" (hereinafter referred to as the "Plan") issued by the State Council, the renewal of domestic medical equipment has ushered in an acceleration. The plan clarifies that by 2027, the scale of equipment investment, including medical and other fields, will increase by more than 25% compared with 2023. At the same time, qualified medical institutions are encouraged to speed up the upgrading and transformation of medical equipment such as medical imaging, radiotherapy, remote diagnosis and treatment, and surgical robots.

At present, Guangdong, Zhejiang, Beijing, Hubei, Shandong, Fujian, Tianjin and other provinces have issued relevant implementation plans, further clarifying the plans and goals of equipment renewal and trade-in.

For example, Fujian and Tianjin issued the "Implementation Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods" on the same day. On April 21, the Guangdong Provincial Health Commission issued the "Work Plan for Promoting the Iterative Upgrading of Equipment and Facilities in the Health Field in Guangdong Province", aiming to increase the scale of equipment investment in the health field in the province by more than 25% by 2027 compared with 2023. On April 19, Hubei Province proposed to strive to update 300 sets of CT, nuclear magnetic resonance, DR, color ultrasound, linear accelerator and other equipment every year by 2027, and transform 10,000 hospital beds.

According to the National Bureau of Statistics, by the end of 2023, the total number of medical and health institutions in mainland China reached 1.071 million, an increase of 38,000 from the previous year. The medical industry group of the research department of CITIC Securities estimates that driven by the renewal and upgrading of medical equipment, the mainland's 500 billion yuan medical equipment renewal market is expected to further expand, and the industry is expected to maintain a high prosperity in the future.

Accelerating the upgrading of medical equipment products is an important measure to promote the high-quality development of the industry. According to the research report of Founder Securities, medical equipment is the largest field in the market share of medical devices in mainland China, with a market size of 573.7 billion yuan in 2022, accounting for about 59% of the overall medical devices. Guodu Securities believes that, on the whole, with the implementation of equipment renewal actions in the medical field, it will drive the release of domestic demand for medical equipment. At present, domestic medical equipment companies are expected to usher in good development opportunities in terms of procurement.

In addition, the central and local governments are also providing relevant financial support to fully release the momentum of medical equipment renewal. The People's Bank of China announced on April 7 that it will set up a reloan for scientific and technological innovation and technological transformation, with a quota of 500 billion yuan and an interest rate of 1.75%, aiming to encourage and guide financial institutions to increase financial support for small and medium-sized scientific and technological enterprises, technological transformation and equipment renewal projects in key areas.

On April 19, the Beijing Municipal Development and Reform Commission issued the "Notice on Further Strengthening the Implementation Plan for Loan Interest Discounts for Equipment Purchase and Renovation in Key Areas", which discounted loan interest for equipment purchase and renovation in 9 key areas. Among them, the investment areas of medicine include the purchase and renovation of equipment involved in general hospitals, specialized hospitals, traditional Chinese medicine hospitals, and primary medical and health institutions organized by social capital to carry out diagnosis and treatment, clinical examination, critical illness, rehabilitation, and scientific research transformation.

CITIC Securities said that the promotion of large-scale equipment renewal focuses on solving the fundamental problems restricting the renewal of medical equipment such as funds and mechanisms, combined with the expansion of the medical equipment industry in the 14th Five-Year Plan period and the successive arrival of financial discount loan funds, forming a series of combination punches, the essence of which is to promote the upgrading of domestic biomedical industry resources represented by medical equipment.

Hong Kong stock related concept enterprises:

Global Medical (02666): Recently, it was announced that in the first quarter of 2024, the group worked hard to promote the development of various businesses, and the overall operating performance achieved stable growth: revenue decreased slightly by 1.6% compared with the same period last year, and profit increased by about 5.0% over the same period last year, of which the revenue of the medical and health business segment increased by about 4.9% year-on-year, and the profit for the period increased by about 36.9% year-on-year. The significant growth of the healthcare business segment was attributable to the steady improvement in the operating quality of the integrated medical business and the significant growth in the new consolidated performance of the full-cycle equipment business of the industrial side, of which the revenue of the equipment full-cycle management business was RMB99.0 million, an increase of approximately 314.8% year-on-year, and the profit for the period was RMB13.2 million, an increase of approximately 614.8% year-on-year.

MicroPort Robot-B (02252): The company's Toumai Robot continues to play its leading edge in the industry, completing the installed sales of a number of products, and the flagship product Dragonfly Eye has achieved a steady increase in revenue by virtue of its good commercialization foundation. At present, the company's surgical robot products that have been approved by the NMPA for marketing include Toumai and Honghu, which were certified in January and April 2022 respectively, of which Honghu also obtained 510(k) certification from the FDA in July 2022, and completed the first commercial installation, and contributed overseas revenue for the first time.

Guichuang Tongqiao-B (02190): Recently released its results for the year ended December 31, 2023, the group achieved revenue of RMB 528 million, an increase of 58% year-on-year; gross profit was 385 million yuan, an increase of 52.4% year-on-year; the loss attributable to equity holders of the company was 78.734 million yuan, a year-on-year decrease of 30.66%; Non-IFRS adjusted profit for the year was 7.033 million yuan, compared with a loss of 25.877 million yuan in the same period last year; The loss per share was 0.24 yuan. According to the announcement, the significant increase in revenue was mainly due to the rapid sales growth of the neurovascular and peripheral vascular interventional devices segments. In addition, the Tongqiao Kirin ™ blood flow diversion device independently developed by the Group has been approved for marketing by the National Medical Products Administration.

Xintai Medical (02291): The history of Xintai Medical can be traced back to 1994, the earliest engaged in the development and application of shape memory alloy material products, and in October 2008 was acquired by Lepu Medical to focus on the development of occluder, the company is currently committed to the research and development, production and commercialization of interventional medical devices mainly for structural heart disease. Recently, the company announced its 2023 results, with revenue of about 326 million yuan, an increase of 31.6% year-on-year. R&D expenses increased by 14.3% year-on-year to RMB61.6 million, and profit attributable to owners of the company was RMB151.5 million, turning losses into profits year-on-year. Adjusted net profit increased by 55.4% year-on-year to RMB173 million, with earnings per share of RMB0.44 and final dividend of RMB0.57 per share (tax included).