Key points of investment:
Domestic electrophysiological surgery has a low penetration rate and a wide market. The domestic product matrix is rich and superimposed to accelerate domestic replacement.
The number of arrhythmia patients in China is large and the number of patients is rising rapidly. The annual increase in the number of radiofrequency ablation surgeries nationwide from 2009 to 21 was 13.2% to 17.5%. In 2020, the number of patients with atrial fibrillation reached 11.6 million, and only 82,000 units of atrial fibrillation surgeries were performed, and the penetration rate was low; the proportion of patients treated with electrophysiological surgery in China was only 1/10 of that of the United States.
Domestic substitutions have been initially achieved in the field of supraventricular velocity; the proportion of RFCA for atrial fibrillation is increasing year by year, and imports currently have a monopoly position. The domestic share of the domestic electrophysiological medical device market was only 9.6% in 2020, but the share of supraventricular surgeries has reached 30% +, and the share of the atrial fibrillation market is low. Domestic manufacturers launched high-density standardized catheters, pressure-monitoring ablation catheters, cryo-ablation products, and PFA products, and superimposed collection drives to begin localization of atrial fibrillation surgery.
Technological transformation has achieved breakthroughs in high-end products, and the collection of new products has accelerated online and hospitalization, and the company's share has increased significantly.
The company took the lead in achieving full coverage of 3D equipment and radiofrequency ablation consumables with technological advancements. Its major products, star magnetoelectric positioning and radiofrequency ablation catheters for pressure monitoring, were approved by NMPA in '22 to begin the process of localizing atrial fibrillation; IceMagic cryoablation catheters and equipment were approved by NMPA in August '23, making it the first domestic cryoablation product approved for atrial fibrillation treatment. The company achieved revenue of 330 million yuan (+26% YoY) and net profit of 5.69 million yuan (YoY +85%); 24Q1 achieved revenue of 89.15 million yuan (+71% YoY) and net profit of 4.17 million yuan (YoY +145%).
The collection accelerates the introduction and admission of new products to the Internet, and accelerates the localization process of atrial fibrillation treatment. The company has achieved a continuous increase in the number of surgeries through collection, and new products have entered the collection catalogue one after another. 1) Since April 23, Fujian Alliance has been collecting and collecting. The company's domestic 3D surgery volume grew by more than 50% year on year; up to now, more than 60,000 3D surgeries have been completed. 2) In the Beijing DRG payment and electrophysiological discharge procurement, new pressure catheters, star-shaped measurement catheters, etc. have won the bid on all lines, and frozen products have been added. 3) In the 3+N alliance, the company won bids for all products, including frozen products.
The first domestic ice and thermal power layout manufacturer, has received major approvals such as pressure conduits and refrigeration, and is expected to continue to contribute high growth momentum.
Pressure catheters, etc. are expected to increase the company's share of atrial fibrillation surgeries and break the import monopoly position. The company achieved about 1,000 cases of domestic pressure catheter use in 23 years, and is expected to exceed 4,000 cases in 24. Overseas atrial fibrillation market expansion progressed simultaneously. August '23 TrueForce? Pressure catheters have been certified by MDR and UKCA, and it is expected that 1000-1500 pressure catheters will be used overseas in 24 years.
The company has iteratively optimized key RF and refrigeration products, and the self-developed pressure pulse ablation catheter project has entered the follow-up stage; shareholder Yang Company's magnetoelectric dual-positioning PFA catheters and equipment have entered the clinical completion stage, and it is expected that 25H1 will achieve NMPA evidence. The company is expected to become the world's second and the first domestic ice and thermal power cooperative layout manufacturer, and new products will continue to contribute to the company's growth momentum.
Profit forecasting and investment advice
We expect the company's 2023-2026 revenue CAGR to be 40.5%, net profit CAGR to mother of 189.1%, and the current stock price corresponds to PS 24/17/12 times. Based on the breadth of the 3D consumables layout and the collaborative layout of various energies, we believe that the company can benefit from the wave of domestic alternatives to electrophysiology, increase the domestic penetration rate in the field of atrial fibrillation, cover it for the first time, and give it a “buy” rating.