Key points of investment

Core logic: improve the layout of upstream dental materials and equipment, domestic leaders expand globally, and have broad space

The company was founded in 2007, is located in Qinhuangdao, Hebei, and listed on the GEM in June 2024. The company is a leading provider of dental repair materials and equipment in China, expanding the field of dental implants, investing in zirconia powder materials, and comprehensively strengthening the entire upstream dental industry chain. The global upstream dental industry is over 30 billion US dollars. Editt's global sales network and brand operations have surpassed domestic revenue. It is expected that as the competitiveness of the company's entire industry chain increases and production capacity is released, it will have a relatively rapid growth rate and broad room for growth.

Editt has achieved full coverage of the upstream dental industry chain and built a one-stop digital dental solution. The company has achieved full coverage of the high-value-added dental industry chain. Dental repair materials (mainly zirconia ceramics, as well as glass ceramics, elastic porcelain, resin materials, etc.) are already leading in the domestic market, and its high-end colorful 3D pro series has been recognized by the global market. The company has accelerated the expansion of the implant system market through the acquisition of Korea's Wolan and invested in zirconia powder suppliers to strengthen upstream raw material collaboration; the company's digital dental equipment includes imaging equipment, cutting equipment, sintering equipment, printing equipment, etc., and was launched. A full set of instant chair-side solutions; in addition, the company launched services such as EditCloud platform design and 21-day chair-side training. Ultimately, the company realized the integration of materials, equipment and services, provided a one-stop solution for digital dentistry, and built a new dental ecosystem.

The global upstream dental industry is over 30 billion US dollars

In 2022, the global dental market volume was about 30 billion US dollars. Among them, the market size of basic dental materials, digital dental equipment, implant materials, and orthodontic solutions was 8 billion, 7 billion, 10 billion, and 5 billion US dollars, respectively. At present, Editt's business has covered most industrial links and operates globally. In 2023, its revenue from China, Europe, America, and Asia accounted for 41%, 23%, 18%, and 16% respectively. Dunsborough Synod and INVISTA are leading global dental materials and equipment companies, with revenue of 28.1 billion yuan and 18.2 billion yuan respectively in 2023; domestic peers include Altron, Shanghai Ge MODERN DENTAL, etc., with revenue of 0.78 billion yuan in 2023. It is in a leading position in the domestic dental repair materials and equipment industry, but its global market share is low. The global market share of the company's zirconia and glass ceramics in 2022 was 4.7% and 2.4%, respectively, as the strategy progressed As well as the release of production capacity, it is expected that there will be a lot of room for improvement in global market share.

The company's fund-raising projects expand production capacity, and both endogenous and epitaxial promote high growth 1) Production capacity has increased dramatically: the company currently produces about 2 million blocks of zirconia, sells more than 1 million blocks of glass ceramics per year, and maintains a high production and sales rate. The fund-raising project will add 1.96 million blocks of zirconia production capacity and 6.8 million blocks of glass ceramics production capacity, greatly increasing production capacity; 2) The company will hold Korea's Wolan to accelerate the expansion of the dental implant field. The global planting materials market is 10 billion US dollars. The Chinese market is growing rapidly, and the planting business is expected to become one of the company's main businesses in mid-term growth; 3) The company acquires 42% of the company's shares in zirconia powder supplier Jingdezhen Wanwei. Zirconia powder is a key raw material for the company's products. This move will help improve the supply guarantee of raw materials, reduce costs, and collaboration R & D.

Profit forecasting and valuation

We expect the company's net profit to be 0.18, 0.24, and 0.31 billion yuan respectively in 2024-2026, up 25%, 29%, and 30% year-on-year, with a compound growth rate of 28%. The corresponding PE is 25, 20, and 15 times, respectively. First coverage with a “buy” rating.

Risk warning

International trade risks; risk of fund-raising projects falling short of expectations; risk of policy changes in the healthcare industry.