Company profile
Founded in August 2004, Kangji Medical is a high-tech enterprise specializing in the research, development, production and sale of minimally invasive surgical instruments and matching consumables (MISIA). In terms of 2019 sales revenue, the company ranks first among domestic manufacturers and fourth among global manufacturers, with a market share of 2.7%, according to Zenshi Consulting. In addition, the company ranks first in a number of segments of the Chinese MISIA market, including disposable casing piercers, polymer ligation clamps, type III disposable electrocoagulation pliers and repetitive casing piercers and pliers.
At present, the company has registered 41 first-class medical devices, 13 second-class medical devices and eight third-class medical devices in China.
Sino-Thai viewpoint
China's MISIA market has a broad prospect: in 2019, the number of minimally invasive surgery per million population and the penetration rate of minimally invasive surgery were 8514 and 38.1%, respectively, compared with the penetration rate of minimally invasive surgery in the United States, the penetration rate was 80.1%, significantly lower. Compared with the traditional open surgery with greater trauma, minimally invasive surgery has less trauma, less pain, less scar, less complications, less risk of infection and shorter recovery time in hospital. With the increasing awareness and acceptance of minimally invasive surgery by patients and doctors, it is predicted that the number of minimally invasive surgery per million people in China and the penetration rate of minimally invasive surgery will increase to 18000 and 49.0% respectively in 2024.
In terms of operating performance: from 2017 to 2019, the company's operating income was 250 million yuan, 350 million yuan and 500 million yuan, respectively, of which the income from disposable casing punctures accounted for about 50%, while the income from polymer ligation clips accounted for about 30%. Gross profit margins are 80.7%, 81.8% and 84.1% respectively, mainly because disposable products usually have higher profit margins and account for a larger share of sales; sales and distribution expenses account for 4.8%, 5.8% and 8.2% of total revenue respectively; research and development expenses account for 4.2%, 4.2% and 3.5% of total revenue respectively, and net profit rates are 55.9%, 63.3% and 64.9%, respectively.
Valuation: based on 1.25 billion shares after the global public offering, the company's market capitalization is HK $154.8 to HK $17.38 billion, which is lower than the average of its peers in Hong Kong. In 19 years, the price-to-earnings ratio of the company is about 43.3-48.7 times, which is lower than the industry average, and the price-to-book ratio is about 5.19-5.24 times, which is lower than the industry average. Cornerstone of the introduction of Hillhouse Capital, OrbiMed and other seven high-quality investors, a total of 170 million U.S. dollars, the two investors participated in the first day of the project share prices are unbroken. This stable price is Goldman Sachs Group, nearly a year a total of 6 projects, the first day of performance 5 up and 1 down. Considering that the company ranks first in many segments of the minimally invasive surgery market, and the industry has broad prospects, we give it 80 points, rated as "active purchase".
Risk tips: (1) the impact of dealer network relationships, (2) changes in government pricing guidelines, (3) product safety risks, (4) inability to launch new commercial products.