Angelalign Technology Inc., an invisible appliance provider, announced today that the company will issue 16.8296 million shares with a final ceiling price of HK $173,200 each, which is expected to be officially listed on the Hong Kong Stock Exchange on Wednesday. The dark market of Fortune will open at 16:15 today.

As the leader of domestic invisible correction, Angelalign Technology Inc. is highly sought after. According to data from Futu Securities, Angelalign Technology Inc. was 2079.16 times subscribed for the public offering and 834.96 times the margin margin, far exceeding Kuaishou Technology, the world's largest public offering so far this year, with a financing subscription of HK $243.107 billion, a sign of its popularity.

A fast-growing industry leader

China's invisible correction market is in a stage of rapid growth, with the market size rising from $200m in 2015 to $1.4 billion in 2019, with a compound annual growth rate of 56 per cent. The agency expects a compound annual growth rate of 21.5% from 2019 to 2030, and the market is expected to reach $11.9 billion by 2030.

From the perspective of permeability, in 2019, the American orthodontic penetration rate is 1.85%, while the Chinese orthodontic market penetration rate is only 0.28%. There is still about 6 times room for improvement and broad space for development.

The competition pattern of the industry is highly concentrated. The total market share of the top two domestic market participants in 2019 is 82.3% (by the number of cases reached)Angelalign Technology Inc. 's market share is about 41.3%, ranking first among domestic enterprises.

Angelalign Technology Inc. is the earliest domestic brand to enter the domestic market. Since the first product was approved in 2006, the company has experienced a long period of growth. After the introduction of pine and cypress investment in 2015, the company has entered a period of accelerated development. The number of cases reached by the company was about 120100 in 2019 and about 101700 in the first three quarters of 2020.

Global cephalic dental manufacturers include Densbornaud, Align Technology, Stroeman, Envista and so on.Angelalign Technology Inc. is the global leader in stealth correction, Align Technology.At this stage, the latter mainly achieves growth through international expansion. In 2020, Align Technology achieved revenue of 2.47 billion yuan, an increase of 2.7% over the same period last year, of which the operating income in China was US $199 million.

Diversified product portfolio and high gross profit margin

Angelalign Technology Inc. currently sells four types of invisibility appliances, including Angelalign Technology Inc. Standard Edition, Angelalign Technology Inc. Champion Edition, Angelalign Technology Inc. Children's Edition with COMFOS.

• Angelalign Technology Inc. Standard EditionIt is the company's classic invisibility correction product. The standard version is used for a variety of malocclusion orthodontics at a moderate price.

• Angelalign Technology Inc. Champion EditionPositioning high-end, is the company's first multi-mode appliance. The multi-mode orthodontic system can choose different diaphragm, different orthodontic modes and different appliance wearing cycles to meet the individual orthodontic needs of patients. According to the cautionary consultancy report, the champion version has two appliances made of master Control and master Control S in the latest version, which can handle more complex cases and shorten the treatment cycle by about 30% without compromising treatment accuracy.

• Angelalign Technology Inc. children's versionIt expands the market of invisible orthodontic therapy for children and represents the transformation of invisible appliance from post-treatment to early intervention. According to the cautionary consultation report, Angelalign Technology Inc. 's children's version is China's first comprehensive invisible correction solution specifically for children aged 6 to 12.

• Angelalign Technology Inc. COMFOSIt is positioned as a value-for-money product to meet the growing aesthetic needs of young people with mild malocclusion.

In terms of performance, both revenue and net profit have achieved rapid growth in recent years. From 2018 to 2019, the company's operating income was 488 million yuan and 646 million yuan respectively, with an increase of 32.23% in 2019 compared with the same period last year; the net profit increased from 60 million yuan to 69 million yuan, and the net profit in 2019 increased by 15.73% over the same period last year. Under the influence of the epidemic in 2020, the company's performance still achieved rapid growth.

Gross profit margin has been maintained at a high level in recent years.From 2018 to 2020, it was 63.8%, 64.6% and 70.4% respectively. The high gross profit margin is mainly due to the relative decrease in staff costs related to raw materials and consumables and manufacturing compared with the production growth brought about by economies of scale and the adoption of automated production lines; at the same time, with the upgrading of the company's products, the company's gross profit margin increases with the trend of high-end products.

In terms of channels, most of the company's products are directly sold inHospitals and dental clinicsIn recent years, the proportion of direct sales in public hospitals and clinics has gradually declined.The proportion of distribution is increasing year by year。

The major shareholder is Hillhouse Capital.

Ownership structureAngelalign Technology Inc. 's major shareholder is pine and cypress investment.The actual controller behind the pine and cypress investment is Feng Dai (owns 100% of the voting shares of the pine and cypress investment)The major shareholder is Hillhouse Capital.(owns 96.97% shares of pine and cypress investment, but no voting shares). Relying on Hillhouse Capital may also be one of the reasons why Angelalign Technology Inc. is widely sought after by individual investors.

In 2015, Songbai invested and acquired the company and became the actual controller of the company. it currently holds about 67.1% of the shares and 60.3% after the completion of the global offering. Pine and cypress investment is an industrial investor focusing on the dental and oral care industry in the digital era, covering the whole industry chain of oral care.

The funds raised by the company's IPO are mainly used forConstruction of Beauty creation Base in Wuxi City, increase investment in R & D projects and cooperative R & D projects, develop intelligent information technology systems, deploy data center platforms and upgrade existing platforms and systems, expand internal sales teams, fund marketing and brand promotion activities, and provide R & D funding for digital transformation.

Angelalign Technology Inc. 's existing capacity utilization is at a high level.The newly built Chuangmei base in Wuxi is expected to be put into production by the end of 2021, and the appliance production capacity is expected to be further released.

Guojin Securities believes that the stealth correction track has a long slope and thick snow, and with the continuous consolidation of the company's leading position in the domestic stealth correction industry, the company's market share is expected to increase gradually.

Valuation

In terms of valuation, the relative valuation method is adopted to value the company, and Opcom, Aibo Medical, Huaxi Biology and Aimeke are selected as comparable companies. According to the unanimous expectation of wind, the weighted average price-to-earnings ratio of comparable companies in 2021 is 176 times.

Taking into account the clear trend of rapid growth in the stealth correction industry, the company's outstanding competitive advantage, and the comparable company valuation, Guojin Securities expects the company to return to its mother net profit of about 254 million yuan in 2021, and the corresponding reasonable market capitalization of the company is expected to reach 38.1 billion-40.6 billion yuan within 12 months.

In terms of risks, we need to pay attention to the risks such as the intensification of competition, the slow improvement of stealth correction permeability, new business type iteration and so on. For example, if the improvement of people's orthodontic awareness is not as expected, the overall market expansion is slow, and the growth rate of the industry and companies may not be as fast as expected.