Founded in 2003, Angelalign is a leading provider of clear aligner treatment solutions in China. For four consecutive years since 2021, Angelalign has maintained its No.1 market share in China's clear aligner market. Angelalign achieved a robust revenue CAGR of 23.8% (in USD terms based on historical exchange rates) from 2019 to 2024. We expect Angelalign to benefit from an improving domestic competitive landscape and rapid overseas expansion, sustaining strong revenue growth with a CAGR of 18.0% for 2024-27E. Based on an SOTP valuation, we derive a TP of HK$69.55 per share. Initiate coverage on the company with BUY.
Steady growth in China with strengthened leadership position. China has a large malocclusion patient base. Rising incomes and aesthetic awareness are expected to boost clear aligner penetration. Angelalign has solidified its No.1 position since 2021 with a 42% domestic market share in 2023, according to CIC. Macro headwinds slowed domestic market growth, resulting in smaller brand exits and likely further share concentration among leaders. With comprehensive portfolios, Angelalign has expanded to lower-tier cities and children/adolescents market, which has driven its solid growth despite macro pressures. In 2024, its domestic case volume increased by 3.2% YoY. Short-term margin pressure from product and channel mixes persists, yet process optimization and cost management have kept domestic profitability stable. We think the clear aligner industry exhibits strong brand stickiness. Outstanding product quality and clinical services enable Angelalign to build deep doctor partnerships, positioning it for further market share expansion.
Rapid globalization with improving profitability. The global clear aligner market reached US$6.5bn in 2024 and is expected to reach US$32bn by 2030E (30.7% CAGR, according to Grand View Research). Angelalign has rapidly expanded overseas since 2022. In 2024, Angelalign's overseas cases achieved 140,700, generating revenue of US$81mn, accounting for 30% of total revenue. Through a "localized operations + M&A" model, Angelalign has established a global supply chain and local teams, rapidly expanding in key markets such as Europe and Brazil. We think Angelalign has largely completed the high- investment customer acquisition phase with profitability, ASP, and gross margin trending upward. We expect overseas business to continue to be Angelalign's long-term growth driver.
Technology innovation and digitalization create high competitive barriers. Angelalign maintains high R&D investment, and owns a comprehensive product portfolio and an advanced digital orthodontic platform. Its iOrtho platform and digital tools improve doctor efficiency and simplify complex case management, which enhance doctor loyalty. Technology barriers, product innovation, and digital capabilities not only reinforce Angelalign's leadership in China but also provide core competitiveness for global expansion.
Initiate at BUY with TP of HK$69.55. We expect Angelalign to maintain strong growth in overseas markets, and forecast a 42.8% overseas revenue CAGR (2024-27E). We project a 3.3% domestic revenue CAGR (2024-27E) with stable operating margins. Based on our SOTP valuation, we assign 18x 2025E P/E to the mature domestic business and 6x 2025E P/S to the rapidly expanding overseas business, deriving a target price of HK$69.55.
