On August 26, the Star Daily (reporter Zheng Bingxun) reported that Shanghai Microport Endovascular Medtech (688016.SH) released its semi-annual report for 2024, showing revenue of 0.787 billion yuan, a year-on-year increase of 26.63%, and a net income attributable to the parent company of 0.404 billion yuan, a year-on-year increase of 44.36%.

Benefitting from this, Shanghai Microport Endovascular Medtech plans to distribute a cash dividend of 16.50 yuan for every 10 shares in the first half of 2024, with a total proposed cash dividend of 0.203 billion yuan, accounting for 50.40% of the net income attributable to the parent company for the first half of the year. In 2023, the company's total cash dividend was 0.248 billion yuan, also accounting for 50.40% of that year's net income attributable to the parent company.

Although Shanghai Microport Endovascular Medtech achieved high growth in the first half of the year, it recently received an inquiry letter from the National Healthcare Security Administration due to the problem of high pricing for its core product, the Castor thoracic aortic membrane stent and delivery system. The company has made the decision to reduce the price of the product by 40% or more and ensure that the terminal price does not exceed 0.07 million yuan.

This morning, the National Healthcare Security Administration disclosed the newly determined prices of thoracic aortic membrane stent products for 12 domestic and foreign companies. Among them, the declared price of Shanghai Microport Endovascular Medtech's Castor stent (200-210mm) is no more than 0.0715 million yuan, and the price of the Casotr stent (60-190mm) is no more than 0.0696 million yuan.

According to a previous announcement by Shanghai Microport Endovascular Medtech clarifying the progress, the ex-factory price of the Castor stent (200mm) is 0.057 million yuan, and the terminal selling price by dealers is 0.12 million yuan. Based on the declared price not exceeding 0.0715 million yuan mentioned above, the terminal selling price has been reduced by 40.42% and above.

The clarifying progress announcement also shows that from 2021 to 2023, the Castor stent from Shanghai Microport Endovascular Medtech had taxable sales of approximately 0.25-0.29 billion yuan, 0.34-0.38 billion yuan, and 0.45-0.49 billion yuan. The company's total revenue during these three years was 0.685 billion yuan, 0.897 billion yuan, and 1.187 billion yuan, respectively.

Based on this calculation, the sales of Castor brackets as a percentage of Shanghai Micro Port Endovascular Medtech's revenue range from 36.50% to 42.34% in 2021-2023, 37.90% to 42.36% in 2021-2023, and 37.91% to 41.28% in 2021-2023.

In addition, from 2021 to 2023, the number of Castor brackets implanted is 4200-4500, 5000-5300, and 6500-7000 respectively. Taking the sample of 2023 and combining it with the aforementioned sales revenue including taxes, the sales unit price of Castor brackets is between 0.0643 million yuan and 0.0754 million yuan.

Shanghai Micro Port Endovascular Medtech stated that because Castor brackets are of a bifurcated structure and the size combinations are more complex than ordinary straight tube products, dealers need to purchase more quantities of different specifications to complete stock preparation in order to meet the demand of emergency clinical surgery. Therefore, the actual sales revenue often deviates slightly from the corresponding amount of implantation.

When asked by a reporter from "Star Daily" about whether Shanghai Micro Port Endovascular Medtech would adjust the selling price to dealers in response to the significant price reduction of Castor brackets, the other party refused to disclose more information on the grounds of "inconvenience to reply".

It is worth mentioning that dealers have always been the core revenue channel for Shanghai Micro Port Endovascular Medtech. Taking the first half of 2024 as an example, about 0.786 billion yuan of Shanghai Micro Port Endovascular Medtech's revenue came from dealers, accounting for 99.90% of its revenue from the distributor model.

It can be confirmed that the price reduction of Castor brackets has become a "sword hanging over" Shanghai Micro Port Endovascular Medtech, and the impact on the company's performance in the second half of the year and even beyond seems to be foreseeable in advance.

In fact, Shanghai Micro Port Endovascular Medtech has previously issued a warning, stating that if dealers have stocked products that are not handled properly in the future, coupled with intensified market competition and other factors, Shanghai Micro Port Endovascular Medtech may face risks such as dealer returns, profit margin decline, which would affect its business performance.

However, the reporter of 'Star Daily' noticed that due to unfavorable factors such as domestic centralized procurement and price reductions, shanghai microport endovascular medtech(group)co.,ltd. is speeding up its 'going global' strategy and making continuous progress.

From 2021 to 2023, the overseas business income of shanghai microport endovascular medtech(group)co.,ltd. was 30.1423 million yuan, 52.7198 million yuan, and 82.345 million yuan respectively, accounting for 4.40%, 5.88%, and 6.94% of the total income.

In the first half of 2024, shanghai microport endovascular medtech(group)co.,ltd.'s overseas income increased to 69.6082 million yuan, a year-on-year increase of 67.04%, accounting for 8.84% of the total income. In comparison, the growth rate of domestic business income in the first half of the year was only 23.59%, about one-third of the growth rate of overseas income.

As of the first half of 2024, shanghai microport endovascular medtech(group)co.,ltd. has sold products in 34 countries in Asia, Latin America, and other countries in Asia-Pacific region. Among them, Castor has entered 19 countries, achieving the first implantation in Greece and Colombia.