Key points of investment
Introduction: The global prevalence of false jaw deformities is high, and the market is expected to have high growth potential; Times Angel is deeply involved in the Chinese market, accumulating a positive cycle with product advantage+quality service+numerous cases, and deepening the sinking market; overseas is expected to seize market share with product cost+doctor service+timely delivery, which is expected to seize market share, estimate the high growth potential of overseas markets, and give a purchase rating for the first time.
Overview of the invisible orthodontic market: Demand is high and supply is scarce. Invisalign is the only company in the world, and China's oligarchy competes.
According to Insight Consulting data, the scale of invisible orthodontics in China is 13 billion yuan in 2023, which is expected to increase to 34 billion yuan in 2030 at a CAGR of 14.7%: 1) Demand side: the average prevalence of false jaw deformities in all age groups in China exceeds 70%, increased consumer aesthetic awareness+increased desire to consume + invisible orthodontics is a better alternative to traditional orthodontics. It is expected that the penetration rate in China will further converge to the global level. 2) Supply side: The number of dentists and institutions per capita in China is significantly lower than that of the US and Japan. Invisible orthodontics is expected to overcome the difficult problem of training orthodontists. At the same time, head dental institutions will accelerate the chain layout and digitally provide operational support. 3) Policy side:
National policy incentives, while regional procurement is exchanged for volume, is conducive to increasing the penetration rate of the low-tier market. 4) Competitive pattern: China's invisible orthodontics market shows a duopoly pattern. Angel of the Times and Invisalign have outstanding leading advantages in terms of products and channels; local brands such as Zhengya and Mei immediately joined the competition.
Age Angel's competitive advantage: The multi-dimensional advantage creates a leader in local solutions for invisible correction. 1) Product improvement: The matrix is complete to meet diverse needs, and the number of completed cases continues to accumulate. The company effectively covers the orthodontic needs of different groups with classic, champion, children's, and COMFOS products and solutions. 2) R&D innovation: Industry-university-research cooperation+interdisciplinary R&D capabilities build a technical moat. The company attaches importance to R&D team building and resource investment, and continuously optimizes technology to enhance product competitiveness. 3) Physician empowerment: Standardized digital platform empowerment, regular training binds physicians' resources. Using standardized and digital systems to lower doctors' operating thresholds, improve diagnosis and treatment efficiency, and provide regular training and all-round empowerment, the number of dentists served by the company has reached 25,000 in 21 years, doubling from 18 years, and has established strong physician stickiness. 4) Channel construction: The direct sales team expands the distribution network and collaborates to help expand the business. Direct sales and distribution are developed collaboratively to improve sales efficiency and reach the city.
Future highlights: Overseas expansion builds a second curve, and domestic growth sinks steadily. 1) Expanding overseas markets: In 2023, the first year of its overseas expansion, Time Angel had 33,000 international cases. In the future, it will seize market share through cost-effective products and better services. At the same time, it has established localized teams to empower people in Europe, the Middle East, America, etc., and explore other emerging overseas markets. 2) Deeply cultivate the sinking market: The growth rate of Tier 1 and 2 cities is slowing down, and it is expected that there will still be room for improvement in the future. The sinking market has become an important strategy for the company to expand new goals. The company occupies the market through price advantages, distribution channels, etc., and provides more cost-effective products and services.
Investment advice: Times Angel is actively exploring and sinking overseas markets. Overseas is still in the early stages of exploration, and profits are disrupted in the short term. It is optimistic that profits from overseas businesses will rise in the medium to long term, showing higher profit elasticity. The estimated 24-26 revenue is 1,729 million/2,064 million/2,462 million, and net profit is 72 million/176 million/278 million. The profit is expected to grow rapidly in 24-25 years, giving it a “buy” rating for the first time.
Risk warning: macroeconomic fluctuations, increased market competition, policy risks, overseas market development falls short of expectations