**: The home of the instrument, unauthorized shall not **, and 24 hours later**.
Recently, Reuters reported that Anatole Investment Management, one of Asia's top hedgers**, sent an open letter to Staar Surgical, the ophthalmology giant and the pioneer of ICL (intraocular lens implantation), urging the latter to spin off its Asian or Chinese business to boost its market valuation.
Looking back at the development of STAAR, it can be said that STAAR is an ophthalmic company that has relied on the headwinds of the Chinese market.
Founded in 1982 and listed on NASDAQ in 1990, STAAR is an American company that specializes in ophthalmic implantable lenses and supporting ophthalmic products. The company started as an intraocular lens (IOL) business for cataract surgery, but faced fierce competition and eventually lost to the five leading companies of ALCON, Johnson & Johnson, HOYA, Bausch & Lomb and Zeiss.
In 1997, the company pioneered the intraocular lens (ICL) for the correction of myopia, and China is currently the country with the largest myopia population base in the world, with nearly 700 million myopic people.
However, Staar's share price has been low for a long time, and the company's market capitalization as of December 22 is 15$4.4 billion. At present, Dawn Investment Management** holds $2 million in shares in Staar, accounting for about 42%。In the face of Staar's low shareholder returns and low market valuation, Anatole gave detailed proposals in the open letter, including the spin-off of its China business and its separate listing.
In response, Staar said it was open to suggestions.
The China business is valued at $5 billion
Anatole Investment was founded in Hong Kong in 2016 by Yang Xiaofan, who has many years of experience on Wall Street in the United States. Even in 2020, when the world was hit by the new crown epidemic, Anatole Investment still maintained the brightest performance of Asia's large-scale hedging** in the same period, and won the "Best Hedging of the Year in Asia" and "Best Long-short Strategy in Asia" respectively by virtue of its overall ranking and comprehensive performance indicators.
In an open letter to Stara, Yang said: "We believe that Stara's is one of the best companies in the consumer healthcare industry, with a strong technology moat and huge growth potential. Based on our research, we believe that the STA is currently significantly undervalued by the market and its potential has not yet been fully realised for the following reasons:
First, we believe that ICL surgery accounts for only 14 percent of all refractive surgeries in ChinaAround 5%, there is still a lot of potential for growth.
We also observe that the demand structure in China is very favorable. Female patients are usually less sensitive to ** and are more concerned about brand and product quality. They are the main group of people who will perform refractive surgery in China in 2020.
Second, we believe that there are a number of low-hanging fruit benefits in the company's China market, and further improvements in its operational and channel efficiencies are within reach.
Due to historical legacies, Staar's pricing strategy is to sell through its distribution channels** at approximately 28% of the retail price (excluding surgical fees), which is well below the industry average. However, as doctors and patients perceive the Stear brand better, there is a lot of room for improvement, which can significantly improve the company's bottom line.
Third, we believe that if the right strategy is adopted, the company's operating margin will exceed 50% by 2030, the operating profit will exceed RMB 4.6 billion, and we estimate that the valuation of its China business will exceed $5 billion, which is well above the current market value of the entire company.
It is proposed to spin off the China business and list it separately
Anatole believes that STAAR can correct the undervaluation of the capital markets and increase shareholder returns by taking the following actions:
1.According to Staar's estimates, the number of refractive surgeries (in terms of eyes) in China is about 150,160,000 eyes, and Staar has a 25% market share. There is reason to believe that the base is off-mark, and we recommend that the Company adjust its total addressable market estimate to 330,350,000 eyes and estimate the STAAR market share at 14.5%。2.We recommend that companies further improve the efficiency of their China channels, increase sales** and reduce the distribution tier by: Most importantly, we recommend that companies disclose their China and/or Asian market profits separately so that investors can better understand the company's long-term profits. 3.We recommend that companies divest their Asian or Chinese operations and list on Asian exchanges. Staar's China operations alone are valued at $5 billion, and we estimate that its Asian operations account for nearly 80% of the company's total sales. Asian investors, closer to the company's core markets, tend to be more familiar with the company's development and better understand the value of the Staar business. We believe that the investor changes brought about by the spin-off will close the gap between the actual value and the market value of STAAR. 4.We recommend that companies run more investor relations events in Asia and reach out to Asian brokers for more research. In response to the open letter, a Staar spokesperson said the company had already responded. We welcome and appreciate the input of our shareholders, and our management team and board of directors regularly review opportunities to maximize value for all shareholders, so we are open to the best way to achieve this.
The Chinese market accounts for 60% of revenue
The latest financial report shows that for STAAR, the Chinese market is becoming more and more prominent.
STAAR's Q3 2023 financial report shows that the company achieved 8030 in the third quarter$80,000 in revenue, a year-on-year increase of 56%, of which ICL revenue increased by 127% to 8106$90,000. The company's low-margin, non-core cataract IOL business is nearing completion.
Although ICL sales increased by 13% in the third quarter, significantly outpacing industry growth, STAAR experienced negative growth in many markets around the world, with the exception of China.
By region, the Asia-Pacific region accounts for the vast majority of the company's revenue, with China alone accounting for about 60% of the company's revenue.
China: ICL revenue +14% to $48.26 million, occupying the top position in the global market. The company expects Q4 China revenue to be +25% YoY;
Japan: ICL revenue +12% to 909$10,000;
South Korea: ICL revenue +1% to 488$60,000;
US: ICL revenue +6% to 416$20,000.
The monopoly will be broken
Domestic enterprises will become the second in the world
STAAR's EVO ICL has been in clinical practice since 2011 and has been favored by doctors and patients for its excellent postoperative results, and its efficacy and safety have been confirmed by a large number of literatures. In 2019, the number of ICL lens implants worldwide reached 1 million, and in only 3 years, by 2022, the global number of ICL crystals has exceeded 2 million.
Its excellent long-term postoperative safety is due to STARA's patented material, Collamer. Nakamura's team reported that since 2006, slit lamp observations of 2,300 ICL-implanted eyes in the author's clinic have not found any signs of ICL shining, whitening, calcification, or change in hue. V4 ICLs, which have been implanted for more than 10 years, are in contact with the ciliary body and iris tissue in the eye, and continue to interact with the components of the aqueous humor, but there is no change in its surface properties and optical properties.
However, the monopoly situation of STAAR may be broken by domestic enterprises.
Haohai Bioscience
In addition to STAAR's ICL, there is only one posterior chamber implantable lens of the same kind in China. From the perspective of correction power, PRL (phakic eye refractive lens) can cover patients above 1000-3000 degrees, and there is a competitive and complementary relationship with ICL. In April 2020, Haohaishengke acquired 55% of the shares of Aijinglun, as one of the only two approved products in China, Yijing PRL is expected to grow into a blockbuster product in the future by virtue of Haohaishengke's brand influence and channel advantages in the field of ophthalmology.
Love Bonord
On July 11, 2023, the Innovative Medical Device Review Office under the Medical Device Technology Evaluation Center of the National Medical Products Administration organized relevant experts to review the application for special review of innovative medical devices, and intends to agree to the following application items to enter the special review procedure.
The launch of this product may break the monopoly of phakic intraocular lenses by imported brand EVO ICL, and is expected to become the second ICL product in the world.
On November 30, the fourth batch of state-organized high-value medical consumables centralized procurement was opened in Tianjin, resulting in the proposed winning results. A total of 128 companies participated in this centralized procurement, and finally 126 companies planned to be selected, with a selection rate of 98%. The average price of the selected products is reduced by about 70%, of which the average price of intraocular lenses is reduced by 60%, which can save 3.9 billion yuan per yearThe average price of sports medicine consumables has been reduced by 74%, and it is expected to save 6.7 billion yuan per year.
This centralized procurement involves intraocular lenses suitable for cataracts, and ICL lenses are used for myopia surgery, which is in the field of consumer medicine and is considered to be a new blue ocean of intraocular lenses.
So, can STAAR, which has achieved a turnaround in performance headwinds in the Chinese market, achieve the goal of increasing its valuation by spinning off its Chinese business and going public?The home of equipment will continue to pay attention.