Investment highlights
For the first time, Xinwei Medical-B (06609) was covered, giving it an outperforming industry rating, with a target price of HK$73.00 (10.7x 2026e forward price-earnings ratio).
The reasons are as follows:
The domestic neurointerventional surgery market is still in its infancy and is growing rapidly; neurointerventional surgery is expected to become a potential treatment option in the grassroots market, bringing huge opportunities to domestic enterprises. The number of stroke patients in China is high, while the prevalence of neurointerventional surgery in China is low. As a result, we expect significant growth in the field of intervention over the next few years. Thanks to lower product prices, technological progress, and extensive terminal market coverage, we believe that domestic related enterprises enjoy a natural advantage in expanding the grassroots market, and their market share is expected to increase dramatically.
A complete stent embolization product package, extensive coverage of doctors and hospitals, and mature commercialization capabilities are expected to greatly enhance the commercialization prospects of the company's products. Xinwei Medical has commercialized four types of ischemic stroke treatment devices, forming a complete product package for stent embolization (the first in China). According to insight consulting data, Xinwei Medical is expected to become the first domestic company to achieve comprehensive product coverage of standard thrombolysis procedures.
A rich portfolio of commercial products and products under development, leading product design and excellent clinical performance. Xinwei Medical has a broad product portfolio, including 10 products already on the market and a wealth of products under development, covering major stroke diseases and major surgical routes in the field of neurological intervention, as well as products under development to prevent ischemic stroke.
What is our biggest difference from the market? The company has a complete suite of stent embolization products. We believe the company has a greater competitive advantage in providing one-stop procurement for hospitals, and there are fewer product compatibility issues.
Potential catalysts: Product approved, hospital coverage exceeded expectations.
Profit forecasting and valuation
We expect the company's earnings per share for 21-24 to be -4.3/-4.0/-1.1/1.9, respectively. We expect the company's revenue for 21-24 to be 0.91/2.80/604/1,036 million yuan respectively, and net profit for 21-24 to be -1.69/-1.56/-0.43 billion yuan respectively. We expect Xinwei Medical to reach a break-even point in 2024. Considering the complete product range and rich product portfolio in the company's pipeline, we covered Xinwei Medical for the first time and gave Xinwei Medical a “Outperforming Industry” rating, giving Xinwei Medical a target price of HK$73 (10.7 times the long-term price-earnings ratio for 2026), which has room for 36.1% increase from the current stock price.
risks
Product development failure; clinical trials failure; product registration delayed or impossible to complete; market competition; sales falling short of expectations; product price reduction; product quality; changes in government regulation or guidelines; intellectual property litigation; financing difficulties; cancellation of government subsidies; dilution of equity; loss of personnel.