In the past few years, the stock market has not been doing well, and many stocks with good performance have also fallen sharply. Yansong Investment Research Circle has done many issues, focusing on high-quality companies that have fallen significantly in the past two years, and has made an in-depth analysis of these companies from the aspects of historical stock price trends, main business, development, and valuation.
The pharmaceutical industry has been in decline for more than 3 years, and the valuations of leading companies have been close to reasonable or even undervalued. Recently, some funds are quietly entering the market through pharmaceutical ETFs. In the long run, the pharmaceutical industry is a "long slope and thick snow" track, is the direction of policy support, and the pharmaceutical sector is currently at the end of the adjustment, which is the direction that value investors should focus on.
Xinmai Medical is a segmented leader in the medical device industry, with a maximum decline of 80% in the past two or three years, rapid growth in performance, and low valuation. Let's get to know this company today. We don't make judgments about the future, but mainly use data to speak, and explain the situation of the company and the industry by reviewing the historical market. The quality of the company requires everyone to think independently and consider comprehensively.
1. Cardiac Medical: Vascular Interventional Device Leader
1. Historical stock price volatility
Rising stage: From December 2019 to July 2021, it rose for a year and a half, from around 80 to a maximum of 317, with a maximum increase of nearly 3 times.
Adjustment stage: From July 2021 to September 2022, it fell unilaterally for more than one year, and then traded sideways for one and a half years. The whole adjustment time is about 3 years, during which the stock price has a maximum amplitude of more than 80%, and is currently down 65%. The price is now basically back to where it was at the beginning of 2020.
2. Main business
Xinmai Medical is mainly engaged in aortic and peripheral vascular interventional medical devices, and its main products are thoracic aortic stent graft system, abdominal aortic stent graft system, intraoperative stent, balloon and stent.
In 2023, the revenue of aortic stent products will be 940 million, accounting for 79.16%; the revenue of intraoperative stents was 132 million, accounting for 11.12%; peripheral and other income was 115 million, accounting for 9.71%.
Interventional treatment of cardiovascular diseases has gradually become one of the preferred clinical methods. Vascular interventional therapy can be divided into coronary intervention, aortic intervention, cerebrovascular intervention, and peripheral vascular intervention according to different treatment sites.
The aorta is the main artery of the human blood circulatory system, it is the largest arterial vessel in the human body, and it is also the main blood vessel that transports blood to all parts of the body. In mild cases, aortic lesions can lead to problems in blood supply, and in severe cases, aortic rupture will lead to blood influx directly into the chest and abdominal cavity, leading to massive hemorrhage and shock death. Therefore, aortic disease is a critical and severe vascular disease, mainly including aortic dissection, aortic aneurysm and aortic stenosis.
From 2016 to 2023, the company's aortic stent sales revenue increased from 95 million yuan to 940 million yuan, with a compound growth rate of 39%; The revenue of peripheral interventional products has grown rapidly in recent years, with a growth rate of 47% in 2023.
The domestic market share of the company's aortic products has ranked first among domestic brands for many years. In 2021, the company's products accounted for 32% of the domestic thoracic aortic endovascular interventional stent market, surpassing Medtronic and ranking first. In the endovascular interventional surgery of the abdominal aorta, the company's products account for 23%, ranking first in China.
3. Development history and major changes
In 2012, the predecessor of the company was established, which was initially part of MicroPort Medical, focusing on the field of aortic and peripheral vascular interventional medicine.
In 2012, MicroPort Divested the aortic and peripheral vascular interventional device business, and Xinmai Medical officially operated independently.
In 2017, the Castor branched aortic stent graft was launched, which was the world's first branched aortic stent, establishing the company's leading position in the field of aortic intervention.
In 2019, it was successfully listed on the Science and Technology Innovation Board; Minos abdominal aortic stent graft and delivery system were approved by NMPA and CE marked.
In 2020, the agent product speX support catheter was approved for marketing;
In 2022, Minos was approved for marketing in South Korea and Colombia; Hercules catheter approved for marketing in Japan;
In 2023, the refinancing project was approved.
In 2024, the Hepa Flow TIPS stent graft system, an interventional oncology product, will be approved to enter the national innovation "green channel", which is expected to become the first domestic approved product in the field of TIPS stent graft.
Since its establishment, the company has been deeply engaged in aortic and peripheral vascular interventional medical devices, mainly doing two things.
One is to develop products, the core is the Castor branched aortic stent graft, Minis abdominal aortic stent graft, and in recent years, it has launched a number of blockbuster products such as Fontus branched intraoperative stent system, Talos straight thoracic aortic stent graft system, Reewarm PTX 0.035 series drug balloon dilation catheter, etc. By the end of 2023, eight products have been approved to enter the national "green channel" for medical device innovation, of which 5 have been approved for marketing.
The second thing is to launch products overseas, such as Castor, Minos, Hercules, Reewarm PTX and other products have been approved for marketing in many overseas countries in recent years.
The company's future planning
According to the company's annual report, Xinmai Medical takes the construction of a people-oriented world-leading emerging high-tech medical group as the company's long-term vision, always puts technology research and development and innovation capacity building in the first place of the company's development, and adheres to continuous investment in product research and development and production technology innovation.
While maintaining and consolidating the competitive advantage in the field of aortic vascular intervention, we will continue to develop and improve the product line layout in the field of peripheral vascular intervention and tumor intervention, further reduce the domestic medical costs in related fields through the development of more new products with technology and price competitiveness, and continuously enhance the market influence of the company's brand, and finally become the world's leading high-tech company in the field of aortic and peripheral vascular intervention.
In terms of product research and development, the aortic business occlusion balloon plan was approved for marketing, Cratos will complete the registration submission within the year, and a number of other aortic products will be actively promoted as planned. In terms of peripheral interventional and oncology interventional business, a number of products such as vena cava filters, venous stents, new-generation bare balloons, and puncture kits are planned to be approved for marketing during the year. In the future, the company will invest more human resources and funds in the field of peripheral vascular intervention and tumor intervention, and build a competitive product portfolio in the field of peripheral vascular as soon as possible through independent research and development, investment and mergers and acquisitions.
In terms of market development, we will sink the domestic market and vigorously develop the county-level hospital market. In terms of the international market, we will continue to promote the market access and promotion of some existing aortic and peripheral intervention products in Europe, Latin America, Asia-Pacific and other countries. Actively promote the pre-market clinical trials of innovative products in Europe and Japan, and promote the promotion and sales of products in more countries and regions.
4. The future development of the industry
The "Healthy China 2030" Planning Outline and "Made in China 2025" both elevate the development of medical devices to the national development strategic position. China is in the early stage of development in the field of aortic and peripheral vascular interventional devices, and with the acceleration of aging and technological progress, the industry has huge development potential and development space.
According to Frost & Sullivan's analysis, the market size of cardiovascular interventional devices in mainland China will be 372 in 2021 based on the ex-factory price of the product
billion yuan, and the market size is expected to reach 140.2 billion yuan by 2030, with a CAGR of 15.9% between 2021 and 2030.
It is estimated that by 2030, the overall market size of China's endovascular aortic intervention stents will grow to 4.31 billion yuan based on the ex-factory price of the product, with a compound annual growth rate of 6.7% from 2021 to 2030, of which the market size of thoracic aortic intervention stents will grow to 2.29 billion yuan by 2030, the market size of abdominal aortic intervention stents will grow to 2.02 billion yuan, and the market size of thoracic and abdominal aortic intervention stents will account for 53.2% and 46.8% respectively.
At present, the domestic aortic and peripheral vascular interventional medical device industry is in a stage of rapid development, and the independent core product performance of some domestic manufacturers represented by Xinmai Medical has partially reached the international advanced level, and import substitution has been gradually realized.
5. Performance and valuation status
The company's historical performance is sustained and stable growth, and it is a typical growth stock. From 2016 to 2023, the operating income will increase from 125 million yuan to 1.187 billion yuan, with a compound growth rate of 38%; Net profit increased from RMB41 million in 2016 to RMB492 million in 2023, with a compound growth rate of 43%.
Finally, look at the valuation. The company's latest valuation is 23 times price-to-earnings (TTM) and 3.15 times price-to-book ratio, and the current price-to-earnings ratio and price-to-book ratio are in the historical average low area.
The market predicts that the company's profits in 2024 and 2025 will be around 650 million and 850 million respectively, and the current market value of 12 billion will correspond to 25 times the P/E ratio for 2023 and 18 times the P/E ratio for 24 years.
Before press release, the company released the 2024 semi-annual performance forecast, which is expected to achieve revenue of 777 million yuan ~ 808 million yuan, a year-on-year increase of +25% ~ +30%; The net profit attributable to the parent company was 391 million yuan ~ 419 million yuan, a year-on-year increase of +40% ~ +50%. The compound growth rate of the company's profits is 40%, and even if the growth rate drops to around 30% in the next few years, the valuation below 20 times P/E can be underestimated without using a calculator.
6. Summary:
- Industry leader, complete product line, set a number of domestic or global first, there are domestic substitution opportunities;
- There are many products under development, and as the products are gradually launched, they will contribute to the growth momentum after entering the harvest period;
- The company's overseas revenue is much lower than that of the leading companies in the industry, and its products have obtained overseas certifications in Europe, the United States and Japan in the past two years;
- The performance grew steadily, with a compound growth rate of 40%;
- The valuation is below 20x P/E, which is significantly undervalued.