Key points of investment

Next Tuesday (June 11), a GEM IPO “Editt” will ask for a quote.

Editt (301580.SZ): The company is a leading domestic provider of dental restoration materials and digital dental equipment.

In 2021-2023, the company achieved revenue of 0.545 billion yuan/0.603 billion/ 0.78 billion yuan, YOY was 50.78%/10.54%/29.47%; realized net profit to mother 0.055 billion yuan/0.116 billion yuan/0.147 billion yuan, and YOY was 24.03%/109.25%/26.90% in that order. In the latest reporting period, 2024Q1 achieved operating income of 0.174 billion yuan, an increase of 18.89% over the previous year, and net profit to mother of 0.023 billion yuan, an increase of 40.75% over the previous year. According to the company's estimates, revenue for the first half of 2024 is expected to increase 22.25% to 34.80% year on year, and net profit to mother will increase 21.20% to 49.47% year on year.

Investment highlights: 1. The company is one of the largest manufacturers of zirconia ceramic blocks for dentures in China, and is a leading domestic dental materials company. Since its establishment, the company has continued to be deeply involved in dental repair materials such as zirconia tiles. It has now grown into one of the largest domestic manufacturers of zirconia ceramic tiles for dentures. According to the company's prospectus, the company's domestic market share of zirconia dental repair materials in 2020 was about 6.21%, ranking among the leading international products in this field and achieving import substitution. In addition to zirconia tiles, the company is also successively expanding dental repair materials such as glass ceramics and resin, and has formed a good brand reputation in the industry. It is one of the only two local dental crown brands in the top ten dental crown material brands jointly launched by CN10/CNPP data research and the top ten brand networks. The revenue scale in 2023 ranks first among the top four local dental materials companies. 2. In line with customer needs, the company successfully developed digital dental equipment and grew into the second largest business. In the process of continuously optimizing dental repair material products, the company discovered customer needs for dental equipment that can achieve digital precision processing and improve denture manufacturing efficiency. In 2018, the company adapted to industry digital trends and customer needs and launched digital oral cavity equipment services to better serve technical customers and clinical customers by integrating equipment products with dental repair materials or adaptively integrating equipment products. During the reporting period, by exploring the equipment needs of existing customers of dental materials, the company's equipment products achieved rapid development; in 2020-2022, the number of customers with overlapping equipment and materials reached more than 75% of the total number of equipment customers, and the purchase amount of overlapping customers remained around 90%; the sales amount of digital dental equipment increased from 0.093 billion yuan in 2020 to 0.204 billion yuan in 2023, and the CAGR reached 30%, and the share of equipment sales in 2023 has reached 26.15%, making it the company's second largest business. 3. Since 2023, the company has continued to achieve epitaxial business development through mergers and acquisitions, and has now entered the field of oral implant materials and upstream zirconia powder. 1) Korea's Wolan is an implant supplier, and its products have obtained registration certificates in various regions such as FDA/CE/CFDA/KFDA. In order to expand its presence in the dental medical device industry, the company acquired 34.36% and 33.50% of Korea's Wolan shares in December 2023 and January 2024 respectively. Currently, it holds a total of 67.87% of its shares and is its controlling shareholder. 2) Jingdezhen Wanwei specializes in zirconia powder production. In order to ensure a stable supply chain, the company entered the upstream zirconia powder business by participating in Jingdezhen Wanwei in October 2023. In the year of the shareholding, Jingdezhen Wanwei entered the company's top five suppliers of zirconia raw materials and achieved a supply of 32.2169 million yuan. The average purchase price of zirconia powder raw materials dropped from 200 yuan/kg in 2022 to 184 yuan/kg in 2023, which greatly improved cost competitiveness.

Comparison of listed companies in the same industry: The company is mainly engaged in R&D, production and sales of dental restoration materials and digital dental equipment, so it chose Guocera Materials, which are also engaged in the production of dental restoration materials and digital dental equipment, and Hyundai Dentistry, which is also engaged in the production of dental prosthetics, as comparable companies to Edith. However, considering that the business structure of the above companies is quite different from the company, the reference value of comparable companies may be limited. Looking at the comparable companies mentioned above, the average revenue scale of the industry is 3.371 billion yuan, the comparable PE-TTM (excluding non-A-share listed companies/arithmetic average) is 31.96X, and the gross sales margin is 46.13%; in comparison, the company's revenue scale is lower than the industry average, but the gross sales margin is higher than the industry average.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.