Abstract: Minimally Invasive Heart Rate submitted a prospectus to the Hong Kong Stock Exchange on May 18, 2023, to be listed on the Hong Kong Main Board. This is the first time the company has submitted a listing application. The co-sponsors are Goldman Sachs and CICC. The company is a medical device company spun off from Minimally Invasive Healthcare (0853.HK) and focuses on heart rhythm management (CRM). Revenue in 2022 was $205 million and net loss was $107 million.
LiveReport learned that Minimally Invasive Heart Rate Management Co., Ltd. (hereinafter referred to as “Minimally Invasive Heart Rhythm”), founded in 1963, submitted a listing application on the Hong Kong Stock Exchange on May 18, 2023 to be listed on the Hong Kong Main Board. This is the first time the company has submitted a listing application. The co-sponsors are Goldman Sachs and CICC.
The company is a medical device company focused on heart rhythm management (CRM). This is a continuationCardiac medicine(169.990, -1.04, -0.61%) (688016.SH), Xintong Medical-B (2160.HK), minimally invasiverobots(15.400, -0.30, -1.91%) After -B (2252.HK) and Minimally Invasive Brain Science (2172.HK), Medical Device Group Minimally Invasive Healthcare (0853.HK) was the fifth company to be spun off and listed. In addition, minimally invasive medicine is also promoting joint venturesmicroelectrophysiology(22.880, -0.03, -0.13%) (688351.SH) Listed independently.
The company has been a pioneer in designing, developing and commercializing innovative products and solutions to better treat and manage cardiac arrhythmias and heart failure. The company is a multinational company headquartered in France. It has carried out R&D and manufacturing activities on three continents as of the last practical date and sells products in 49 countries and regions around the world. It has an outstanding history of innovation and an outstanding business record.
According to Frost & Sullivan statistics, only five multinational companies, Medtronic, Abbott, Boston Science, Baiduoli, and Sci-Tech Innovation Heart, entered the CRM equipment industry and had a global market share of over 90% in 2021. Among them, Minimally Invasive Heart Rhythm is the only company that focuses only on CRM devices, and most other multinational companies are involved in various medical devices. In Europe, based on sales revenue and sales volume in 2021, the company has the largest market share of cardiac pacemakers in France and a considerable market share in several other important markets (such as Italy, Spain, Portugal, Switzerland and Austria). In China, based on sales revenue and sales volume in 2021, the company is the largest supplier of cardiac pacemakers manufactured in China.
The company has a balanced product portfolio covering a wide range of innovative CRM devices, including (i) low voltage CRM devices, namely cardiac pacemakers (for bradycardia) and cardiac resynchronization pacemakers (CRT-P) (for heart failure); (ii) high voltage CRM devices, namely implantable cardiac arrhythmic defibrillators (ICDs) for tachycardia (for tachycardia) and cardiac resynchronous treatment defibrillators (CRT-D) (for heart failure with a high risk of sudden cardiac death); (iii) conductors; Cables that transmit electrical signals between CRM devices and the heart); (iv) Heart rhythm management Patient monitors and (v) cardiac arrhythmia diagnostic instruments.
The company's revenue comes from sales of medical devices and revenue from after-sales service. Sales of medical devices accounted for 93.6% of revenue in 2022.
Investment highlights
• Occupy a leading position in the global mind and law management market with high entry barriers, and the ability to seize opportunities in mature markets with high profit margins and high-growth emerging markets;
• A comprehensive, innovative and complementary product portfolio with differentiated characteristics;
• A broad and balanced line of innovative products that further strengthens the company's CRM equipment product portfolio and makes the company better prepared for future growth;
• World-class R&D platform, supported by the company's proprietary core technology and comprehensive global intellectual property portfolio;
• Vertical integrated operation platform and comprehensive global manufacturing and sales network;
• A professional and experienced management team of industry veterans with a global perspective, by the world
Backed by top tier investors.
Company information: Official website: www.microport-crm.com
Company address: 4Avenueréaumur, 92140Clamart, France
Hong Kong address: 5/F, Manulife Plaza, 348 Kwun Tong Road, Kowloon, Hong Kong
Financial analysis
2020, 2021, 2022 for the three years ended 31 December 2022:
Revenue was about 180 million US dollars, 220 million US dollars and 205 million US dollars respectively, with a compound annual growth rate of 6.76%;
Gross profit was approximately US$101 million, US$125 million, and US$116 million respectively, with a compound annual growth rate of 6.91%;
R&D is about -506 million US dollars, -64 million US dollars, and -59 million US dollars respectively, with a compound annual growth rate of 2.52%;
Net profit was about -504 million US dollars, -88 million US dollars, and -107 million US dollars respectively, with a compound annual growth rate of 40.33%;
The gross margins are about 56.14%, 56.60%, and 56.30%, respectively;
R&D accounted for about 103.84%, 72.33%, and 55.43% of losses, respectively.
The company's revenue and gross profit grew steadily, and net loss increased; gross margin remained around 55%.
Industry prospects
Global CRM equipment market size
The size of the global CRM equipment market increased from 9.7 billion US dollars in 2016 to 10.6 billion US dollars in 2021, with a compound annual growth rate of 1.8%, and is expected to increase to 12.8 billion US dollars in 2030, with a compound annual growth rate of 2.0% from 2021 to 2030. The global CRM equipment market declined in 2020, mainly due to the COVID-19 pandemic. The following chart shows the history and estimated size of the global CRM equipment market:
Global pacemaker market
The global cardiac pacemaker market is expected to grow from $3,597.4 million in 2021 to $4,224.9 million in 2030, with a CAGR of 1.8%. In 2021, the size of the US was $1,617.9 million, making it the largest market for cardiac pacemakers in the world (45.0%). China is expected to be the fastest-growing cardiac pacemaker market, with an estimated compound annual growth rate of 5.7% from 2021 to 2030.
Industry status
The global CRM equipment market is currently dominated by only five multinational companies, namely Medtronic, Abbott, Boston Scientific, Baiduoli and our company. All other players operate on a regional level, and their operations fail to simultaneously cover key global CRM device markets such as the US, Europe, and China. As far as CRM device sales in 2021 are concerned, in terms of sales value, these five major multinational companies accounted for more than 95% of the global market share.
Comparing IPOs of companies in the same industry
The companies selected for comparison in the same industry this time are: Xintai Healthcare (2291.HK)
Xintai Medical specializes in R&D, production and commercialization of interventional medical devices mainly for structural heart disease, and is a pioneer in this field. According to Frost & Sullivan's report, the company is a leading interventional medical device supplier for congenital heart disease (the main application area of structural heart disease) in China, with a broad portfolio of marketed products and products under development. According to the same source, the company is the largest manufacturer of congenital heart disease blocker products and related surgical ancillary products in China. Based on revenue confirmed from sales in China in 2020, the company's market share is 38.5%.
Major shareholders
The controlling shareholder Minimally Invasive Healthcare (0853.HK) holds 50.13% of the shares through Microport International HK; Mr. Yu Feng holds 16.82% of the shares through Sino Rhythm; Gao Lin holds 12.56% of the shares through SPR-ViHoldings; and Employee Trust holds 9.21% of the shares through Hong Kong Central Securities Trust Co., Ltd.
In addition, other shareholders include Shanghai Lingxia (holding 0.25%), Shanghai Lingfu (holding 1.66%), and CRM Management Global (holding 2.73%), CICC (holding 1.60%), Country Club (2007.HK) (holding 1.60%), E-Fangda (holding 0.40%), Kangfang Biotech (9926.HK) (holding 0.40%), and ICBC International, etc. owned by employees and independent third parties.
Management situation
Mr. Jonathan W Chen, aged 48, was appointed as a director on August 12, 2019, and transferred as a non-executive director and chairman of the board on May 12, 2023. He is mainly responsible for overseeing the management and operation of the company. Mr. Chen has over 17 years of experience in the medical device industry. Mr. Chen joined Minimally Invasive Healthcare Group in July 2012 and has been its Chief International Business Officer since June 2021. He is mainly responsible for the international business of Minimally Invasive Healthcare Group. Prior to joining Minimally Invasive Healthcare Group, Mr. Chen worked for Deutsche Bank in the US from 1997/6 to 1996/9. Mr. Chen received an honorary bachelor's degree in biological science and a bachelor's degree in economics from Stanford University in June 1997.
Mr. Benoît Christophe Michel Clinchamps, aged 57, was appointed as a director on April 28, 2020, and reassigned as an executive director on May 12, 2023. He has been the president since May 2018 and is mainly responsible for the overall management of the company's global business. Mr. Clinchamps has also served as a director of several of the company's subsidiaries. Mr. Clinchamps has over 18 years of experience in mind management in the medical device industry and over 24 years of experience in the medical device industry.
Pre-IPO financing
Intermediary team
According to LiveReport big data statistics, there are a total of 10 minimally invasive heart rhythm intermediary teams, including 2 sponsors. The data performance of the nearly 10 sponsorship projects is average; there are 3 company lawyers in total, and the comprehensive project data is average. Overall, the agency team's historical data performance is average.
Sponsor underwriting history
Goldman Sachs recently had a first-day breakout rate of 37.76%;
CICC's first-day breakout rate recently was 42.21%.
Analysis of public opinion
Currently, the parent company Shanghai Minimally Invasive Medical Devices (Group) Co., Ltd. was searched through the Tianyancha website and found the following risk tips:
Of the 117 own risks, mainly suing others or being sued for reasons such as patents, labor contracts, sales contracts, etc.;
One of the peripheral risks is the cancellation of the company it invested in;
Among the five historical risks, the main ones are failure to comply with legal obligations on time, enforced by the courts and the loss of some of the shares;
Of the 88 warning risks, the main ones are changes in information on legal representatives, investors, registered capital, etc.
Overall, the company's public opinion is in a normal state, and there is no widespread negative information.
Recent market conditions for Hong Kong stock IPOs
According to LiveReport's big data, the average issued market value of the last 10 listed IPOs was 7.447 billion, the largest market capitalization was Li Du, and the lowest market value was Yijun Group Holdings; the average number of issued PE was 15.55 times, and PE was at the middle level; the average number of subscribers was 5828, and the average subscription multiplier was 8.26; the average cornerstone ratio was 41.28%, with a slight increase recently;
Recently, the performance of the Hong Kong IPO market has been poor. The average increase in the dark market of the last 10 IPOs was 5.79%, and the average drop on the first day was 2.00%. Zhongtian Hunan Group surged more than 120% in dark trading and on the first day. Huaibei Green Gold Co., Ltd., Zhongbao New Materials, and Beisen Holdings all plummeted. The first-day performance of the three new companies recently launched on the first day of Waterloo, the first day of Hong Kong stock liquor company, was also disappointing.
