20220321-招银国际-康德莱医械-01501.HK-Strong_growth_in_interventional_medical_devices_4页_1013kb

Kindly Medical (1501 HK) Summary

Core Content

Kindly Medical is a Chinese medical device company that has demonstrated strong growth in its interventional medical devices segment. The company's financial performance and strategic initiatives have been highlighted in a recent equity research update by CMB International Global Markets.

Main Points

• Revenue Growth:

  • In 2021, Kindly Medical reported revenue of RMB465 million, a 30% YoY increase from RMB358 million in 2020.
  • The growth was primarily driven by the interventional medical devices segment, which saw a 64% YoY increase in sales.
  • The company expects 36% and 30% YoY revenue growth in FY22E and FY23E, respectively.

• Profitability:

  • Gross profit and net profit for 2021 were RMB276 million and RMB143 million, representing 17.6% and 17.8% YoY growth.
  • The blended gross margin decreased from 65.4% in 2020 to 59.3% in 2021, primarily due to the near-zero revenue from masks, which previously contributed 20% of total revenue and 24% of gross profit.

• Product Expansion and Clinical Trials:

  • The company obtained 8 NMPA registration certificates for Class III medical devices and 3 SMPA certificates for Class II devices in 2021.
  • It also secured 5 FDA approvals.
  • HanchorValve, a novel balloon-expandable TAVR product, was successfully implanted in the first patient in November 2021 and is being evaluated in a multi-center clinical trial led by Zhongshan Hospital.

• Distribution Network:

  • By the end of 2021, the company's distribution network covered 2,100 domestic hospitals in China, a 46% increase YoY.
  • It has 184 overseas customers across over 51 countries and regions, a 29% increase YoY.

• Financial Projections:

  • The company is projected to achieve 25% and 30% YoY attributable net profit growth in FY22E and FY23E, respectively.
  • The target price (TP) was revised to HK$31.46, based on a 9-year DCF model with a WACC of 12.62% and a terminal growth rate of 2.0%.

• Valuation:

  • The DCF valuation model estimates the enterprise value at RMB4,282 million (HK$5,222 million) as of FY22E.
  • The equity value is expected to grow significantly over the next few years, reflecting positive outlook on future earnings and growth.

• Shareholding and Performance:

  • Key shareholders include Kindly Holding (25.82%), Huaige Health Investment (15.18%), and Dongke Liang (5.75%).
  • Others hold 53.25% of the shares.
  • The stock has experienced negative performance over the past year, with a 51.7% drop in absolute terms and a 43.8% drop relative to the market.

• Key Ratios:

  • Interventional medical devices account for a growing portion of revenue, reaching 94% in 2021.
  • Gross margin decreased from 65.4% to 59.3% in 2021, but is expected to recover and increase in the following years.
  • ROE is projected to rise from 9% in FY20A to 16% in FY24E.

Key Information

• Target Price: HK$31.46 (revised from previous HK$44.91)
• Current Price: HK$11.74
• Market Cap: HK$1,949 million
• Average 3-month Turnover: HK$1.19 million
• 52-week High/Low: HK$44.80 / HK$10.80
• Total Issued Shares: 104 million
• EPS Growth: Expected to increase from 0.73 in FY20A to 1.80 in FY24E.
• Net Profit Attributable to Shareholders: Expected to grow from RMB112 million in FY20A to RMB290 million in FY24E.
• Auditor: KPMG

Investment Recommendation

• Ratings: BUY
• Potential Return: Over 15% over the next 12 months

Disclaimer

This report is for informational purposes only and is not intended as investment advice. CMB International Global Markets Limited (CMBIGM) does not provide individually tailored investment advice. Investors should consult with a professional financial advisor before making investment decisions. CMBIGM may have conflicts of interest and is not liable for any losses incurred from reliance on this report.