Kangfeng Biology: Focus on the blue ocean interventional cryotherapy device industry; first coverage, giving “buy” Kangfeng Biotechnology (Shanghai) Co., Ltd. (Kangfeng Biology) to focus on the development and commercialization of minimally invasive interventional cryotherapy medical devices. According to Frost & Sullivan data, China's interventional cryotherapy device market reached 391 million yuan in revenue in 2020, and the market is expected to grow to 11.234 billion yuan in 2030 (202E-2030E CAGR: 39.9%), driven by the expansion of the patient population targeted by minimally invasive interventional cryotherapy, technological innovation, and the safety/efficacy advantages of cryotherapy itself. Given that interventional cryotherapy devices are a blue ocean market with high barriers, we are optimistic that Kangfeng Biotech will stand out in the market with its solid technical foundation, extensive indication coverage, and competitive academic network. We expect Kangfeng Biotech to have revenue of $0.38/1.62/343 million in 2023-2025, a valuation of HK$6.682 billion under the DCF Act (assuming WACC 10.5%, sustainable growth rate 2.5%), and a target price of HK$27.95; first coverage, “buy”.

Vascular Interventional Pipeline: Leading cryoablation platform in China. Cardiac cryoablation is the leading product. We expect the company's three vascular intervention products to contribute more than 2 billion yuan in revenue by 2030. Consider: 1) Cardiac cryoablation systems for the treatment of paroxysmal atrial fibrillation (approved for listing under company guidelines 4Q23). Considering their unique energy source and ideal competitive pattern, we are optimistic that their sales in 2030 may exceed 1.4 billion yuan; 2) Cryofocus cryoablation targets intractable hypertension treatment (company guidelines 2H25 listing), consider this product or The world's first cryoablation RDN product (according to the company's prospectus), we expect it to impact sales by 500 million yuan in 2030; 3) The pulmonary hypertension refrigeration system may be listed on 2H27 (company guidelines), which is expected to become a long-term driving force for the pipeline.

Natural channel endoscopic interventional pipeline (NOTES): It has a wide range of indications. Sword indicates that the company's NOTES pipeline, which does not meet the needs of patients, has 11 candidate products for treatment of interventional diseases across the respiratory tract, urinary tract, and digestive tract. We expect this pipeline to impact more than 600 million yuan in revenue in 2030:1) Considering that the company's respiratory intervention pipeline targets major indications such as COPD, asthma, and airway stenosis, and the penetration rate of cryotherapy in the respiratory field is still low. Combined with the gradual maturity of future respiratory intervention pipelines, we expect this pipeline to contribute 600 million yuan in revenue in 2030; 2) Bladder cryoablation is the first commercial product in this field in China. We believe this product may be one of the driving forces of the company's short-term growth; 3) According to the company's guidelines, gastric cryoablation systems and frozen esophageal jet systems Mist treatment systems are different It will be listed on 2H26/1H27, and we expect sales to continue to rise in 2030.

Kangfeng Biology: Backed by unique and solid cryotherapy technology, commercialization capabilities are beginning to take shape. We believe that the company's core competencies include: 1) its unique product pipeline platform with liquid nitrogen as the main refrigerant energy source, and advanced catheterization technology; 2) its strong R&D capabilities (R&D team of 98 people), patent layout and clinical cooperation with leading hospitals; 3) its continuous improvement of commercialization capabilities, including continuous expansion of distribution channels and perfect academic promotion strategies.

Risk warning: R&D risk; commercialization risk; slow increase in the penetration rate of cryotherapy; risk of hospital-side diagnosis and treatment.