Introduction to this report:

The company is a leading enterprise in the field of structural heart disease and neurological intervention. It is also involved in two high-growth markets, actively lays out new models of collaborative research and development at home and abroad, and has entered a harvest period of innovative products one after another. Covered for the first time, giving a rating for increasing holdings.

Summary:

Covered for the first time, giving a rating for increasing holdings. As the commercialization of TAVR progresses and major neurological intervention products are approved for listing one after another, the company is expected to continue to grow at a high level in the next few years. It is predicted that 2023-2025 revenue will be 475/748/1,081 million yuan, and net profit to parent will be -3.64/-1.80/015 million yuan respectively. Referring to comparable company valuations, the target PS for 2025 is 4.8X, corresponding to 7.64 yuan, equivalent to HK$833. Covered for the first time, giving a rating for increasing holdings.

Iteratively lay out interventional valve products to seize industry development opportunities. The clinical importance of interventional procedures to treat valvular heart disease continues to increase. In 2022, the number of TAVR implants in China was about 10,000, and the penetration rate was less than 1%. The number of AS/AR patients is rising steadily in the context of aging. With the expansion of TAVR indications, the expansion of medical insurance coverage, and the sinking of technology, the domestic TAVR market is about to explode. The company has iteratively laid out four generations of self-developed TAVR products, with latecomers coming first, marketing teams, hospital coverage, and implants quickly catching up with the first movers. Market share continues to increase, demonstrating strong commercialization capabilities; BD reflux valves and self-developed shockwave systems are progressing smoothly and are expected to provide new treatment plans. In response to the current almost empty second and tricuspid valve intervention market, the company's products under development have excellent performance and lead in R&D progress. It is expected to take the lead in listing in the future, providing new performance growth points.

The comprehensive layout of the three neural intervention product lines has led to rapid growth in performance driven by innovative techniques. With the development of technology and the continuous enrichment of clinical evidence, neurointerventional surgery has gradually become the mainstream treatment for cerebrovascular diseases. The market has shown a rapid growth trend in recent years, and the size of the Chinese market is expected to reach 37.1 billion yuan in 2030. The company currently has 16 neurological intervention products, covering the three product lines of hemorrhage, ischemia, and pathways, and has launched innovative treatment techniques including TRUST, BASIS, and “zero exchange”. Through innovative products and differentiated academic marketing and promotion work, revenue in the neurological intervention sector is growing rapidly. In the future, with the help of collection, the company is expected to continue to firmly grasp market growth opportunities and continue to increase its share.

Catalyst: Achieving progress in the research pipeline, implantation volume and sales volume exceeding expectations Risk warning: mining risk, R&D progress falls short of expectations, industry competition intensifies