A benchmark for overseas use of household medical devices with an in-depth layout in the US market. Going overseas helps medical device companies open the ceiling of growth. In overseas markets, the US has received the most attention from companies due to its strong ability to pay and high barriers to entry.

Among them, Jiu'an Medical began exploring the US market in 2010. After more than ten years of development, it has established iHealth's brand influence, and has accumulated solid overseas commercialization capabilities. Under the COVID-19 pandemic, the company seized the opportunity to achieve a sharp increase in the volume and performance of COVID-19 antigen kits, and further expand iHealth's brand influence in the US market. In the future, the company will continue to promote products such as triple inspection and CGM to go overseas.

Present: Abundant cash and financial assets, with a solid foundation in the US market.

1) Abundant assets guarantee the stable development of the company. At the end of 2024Q3, the company's total cash and financial assets reached $22.9 billion, which is the same as the company's market value at the close of November 12, 2024. Abundant liquid assets guarantee the company's R&D and shareholder returns. Furthermore, the professional asset management team, the US dollar interest rate cut cycle, and the strategic layout of cutting-edge technology fields are all expected to increase the company's return on investment.

2) iHealth has a solid foundation in the US market. After years of development, iHealth has gone through the entire clinical, registration, production, and transportation process in the US market, accumulated rich channel resources, and launched large-scale e-commerce platforms such as the company's official website and Amazon. During the COVID-19 pandemic, iHealth kits successfully expanded their influence in the US market with advantages such as sufficient stock, fast delivery, ease of use, etc., and became the mainstream brand in this field in the US market, establishing a brand advantage, and providing a foundation for the release of self-developed/proxy products.

Future: The triple inspection is expected to become a new “explosive product”, and CGM has broad prospects.

1) The triple inspection is expected to become a new “explosion” in the US market. The early symptoms of the three respiratory infectious diseases of COVID-19, influenza A, and influenza B are similar. The triple test product can quickly diagnose patients with respiratory infectious diseases. It fits the characteristics of the US market, and its market is more stable compared to individual COVID-19 testing products. The potential market size of the Joint Inspection Service in the US can reach 0.68 billion US dollars. Based on strong brand advantages, the company's three joint inspection products were quickly released after launch this year, and are expected to become another “explosive product” for the company.

2) CGM collaborates with the “O+O” model for diabetes diagnosis, treatment and care, and has broad prospects. The company's diabetes diagnosis, treatment and care “O+O” business targets major diseases and is expected to develop rapidly under the impetus of employee stock ownership plans.

The CGM being developed by the company can collaborate with the “O+O” model for diabetes diagnosis and care. Both China and the US have broad market space. High cost performance and patent protection are the keys to competition in the US CGM market. On the one hand, the company has its own brand CGM products under development, and on the other hand, it may be able to use its brand channel advantages in the US market to help outstanding domestic CGM products go overseas.

Investment advice: The company is one of the few domestic medical device companies that have achieved deep localization in the US market. It is expected that the household medical device product system will continue to be extended in the US market with the strongest payment capacity in the world; in addition, abundant assets will continue to give blood to the company through asset management business. We expect the company's net profit to be 1.7, 1.8, and 2 billion yuan respectively in 24-26, up 35.6%, 6.0%, and 11.4% year-on-year. We chose the segmented valuation method to give the company a 2025 target PE 13X for its main medical business, with a corresponding market value of 11.4 billion yuan, and a corresponding market value of 19.1 billion yuan for the company's asset management and investment business, then the company's total target market value for 2025 is 30.5 billion yuan, corresponding to a target price of 62 yuan. Covered for the first time, giving a “Recommended” rating.

Risk warning: 1. Product development and sales progress falls short of expectations; 2. Increased industry competition; 3. Asset management risk; 4. Risk of exchange rate fluctuations; 5. Risk of sharp contraction in COVID-related revenue.