Investment logic

An innovative medical device company with a rich pipeline, focusing on cardiovascular intervention research and development. The company adheres to the development strategy of “innovation” + “internationalization”, and the market share of the main products sold has been in a leading position in China for a long time. Currently, the company has three main product lines, including structural heart disease business, peripheral vascular disease business, and pacing electrophysiology business. The company achieved revenue of 1.267 billion yuan in 2023, +15.5% year over year; achieved revenue of 0.653 billion yuan in the first half of 2024, +2.1% year over year, and maintained a year-on-year growth trend under the influence of the external environment.

Aortic's three innovative product portfolios will soon be approved to form a comprehensive intervention solution.

The number of intra-aortic interventions in China was 0.05 million units in 2021. The compound growth rate reached 17.8% in the past 4 years. The number of patients with aortic disease worldwide reached 30 million, and China reached 4 million. The penetration rate is still low, and the market will maintain a high growth rate in the future. Currently, the company is developing three innovative product combinations, chimney brackets, and chest and abdominal brackets, which have all passed the Green Channel registration and approval for innovative devices in China. After approval, the boss will establish a global aortic product echelon, which can more effectively deal with market competition and price reduction risks.

The original revolutionary iron-based bracket technology has both “supporting performance” and “absorbability” characteristics.

Since 2006, the company has been deeply involved in the research and development of iron-based absorbable materials and devices, by penetrating about 0.05 wt into high-purity iron. % nitrogen enables ferroalloy stents with a wall thickness of only 50 microns to obtain mechanical properties, clinical handling performance and range of indications comparable to mainstream permanent stents. In November, the IBS (iron-based bioabsorbable stent) drug-eluting coronary stent system successfully completed a one-year follow-up phase III clinical study. The results further proved that the stent has ideal safety and efficacy. It is expected that the product will be registered and approved domestically within 2 to 3 years, and fully degradable metal coronary stents made of iron are expected to show great potential for clinical application.

Internationalization is expanding rapidly, and the European business is expected to gain further strength. In 2023, the company achieved revenue of 0.275 billion yuan in overseas markets, +36.0% year-on-year. The company maintains a leading position in global expansion and has achieved considerable sales revenue in Europe and the Asia-Pacific region. Currently, the company covers nearly 120 countries and regions, has more than 970 global agents, and structural heart disease products are widely recognized in Europe and other regions, and is expected to gain further strength in the future.

Profit forecasting and investment ratings

We are optimistic about the long-term development of the company in the field of cardiovascular intervention. We expect the company's revenue in 2024-2026 to be 1.256/1.687/2.076 billion yuan, -1%/+34%/+23% YoY; net profit to mother 0.294/0.373/0.466 billion yuan, +12%/+27%/+25% YoY. Referring to the comparable valuation situation of listed companies in the same industry, the company was given a PE valuation of 21 times in 2025, a target market value of 7.8 billion yuan (approximately HK$8.33 billion) within 12 months, and a target price of HK$1.80 per share. For the first time, coverage was given an “increase in holdings” rating.

Risk Alerts

Risk of price reduction in product collection; risk of developing projects not meeting expectations; risk of product promotion falling short of expectations; risk of exchange rate fluctuations.