Company trends

The current situation of the company

On March 3, 2023, we participated in the market-wide R & D open day of Peijia Medical Organization, and investigated the management.

Comment

A number of blockbuster innovative products are progressing smoothly, and 2025-26 may be a concentrated harvest period. 1) regurgitation TAVR (transcatheter aortic valve replacement) TaurusTrio has completed technology transfer, and the company expects Fuwai and Anzhen Hospital to lead domestic multicenter registered clinical trials within this year. This product is currently the only stock reflux TAVR approved in the world (certified by CE in 2021), and Peijia was exclusively licensed in Greater China at the beginning of 2022. 2) Mitral valve replacement HighLife has entered the stage of registered clinical trials, and the 6 cases currently carried out are in good condition. It adopts the transfemoral / interatrial septal approach and is anchored by "ring + valve". Peijia has the Greater China rights and interests of this product, and its partners released excellent one-year follow-up data of 30 overseas patients at the end of 2022 (the technical success rate is 90%. The one-year mortality rate is 17%). 3) tricuspid valve replacement MonarQ entered its first human trial in Europe, adopting a unique biodynamic design and independent of the radial support generated by pressing the annulus. Peijia has its global rights and interests. We judge whether it is the first product of Peijia internationalization; 4) the clinical registration of the third-generation dry valve TaurusNXT has been carried out smoothly, and the company expects to complete the patient enrollment within 2023; 5) the mitral marginal repair GeminiOne is in a registered clinical trial; 6) TaurusWave is in scientific and clinical research, the product uses shock wave to treat calcification and is expected to be used for aortic valve repair or TAVR preoperative preparation. We believe that the company has established a comprehensive, leading and differentiated pipeline in the field of heart valves, and we expect these innovative products to read out key clinical data and usher in a centralized harvest in 2025-26. Peijia is also working with the government to build an incubator platform, which currently has early projects such as valvular imaging and TAVR surgery robots.

The operation recovered strongly after the epidemic, and the dose of the second generation TAVR was timely. Since February, the impact of the epidemic and the Spring Festival holiday has been gradually eliminated. We judge that TAVR surgery is undergoing a rapid recovery. We predict that the number of TAVR operations in China will grow by 40-50% year-on-year in 2023, and more provinces will include TAVR in health insurance.

There are differentiated products in neural intervention, and collection is expected to land gently. The company also demonstrated the advantages of nerve intervention in this open day: 1) Fastunnel conveying balloon dilatation catheter that combines balloon dilatation and stent delivery to effectively reduce device exchange complications; 2) with basket capture design, it can be used for Syphonet thrombectomy stents for BASIS (distal thrombectomy stent-protected balloon angioplasty). We expect large-scale collection or mild landing within this year. Peijia already has a relatively complete bleeding / ischemia / pathway product line, and we believe that neural intervention is expected to become a cash flow business in the future.

Profit forecast and valuation

We keep our earnings forecasts and outperform industry ratings unchanged. Considering the rapid recovery of terminal surgery, we raise the target price based on the DCF model (WACC=9.5%, sustainable growth rate = 1.5 per cent) by 10 per cent to HK $14.3, which is 25 per cent upside from the current share price.

Risk

The research and development of new products failed, the price reduction exceeded expectations, the competition situation deteriorated, and the internationalization fell short of expectations.