Just over one year after its listing, OrbusNeich Medical (06929) ushered in the "darkest moment".
Recently, the share price of OrbusNeich Medical has continued to decline, and as of March 5**, the company's stock price was reported at 3HK$57, a new low since listing, and the share price fell by about 60% from the issue price. Peak (March 14, 2023, 16HK$8) market value evaporated by more than HK$10 billion.
On the news side, after the market on February 16, Hang Seng Indexes Company announced the results of the quarterly review of the Hang Seng Index series as of December 31, 2023, and the adjustment will officially take effect on March 4, 2024, and OrbusNeich Medical has become one of the "excluded listed companies".
Zhitong Financial APP has learned that according to the latest revision of the "Implementation Measures" of the Shanghai Stock Exchange and the Shenzhen Stock Exchange in 2023, Hong Kong Stock Connect**, which is a constituent stock of the Hang Seng Composite Small Cap Index and does not belong to A+H shares, will be transferred out of Hong Kong Stock Connect** if the average month-end market value of Hong Kong stocks is less than HK $4 billion. According to LiveReport big data, the average market value of OrbusNeich Medical during the review period has reached the standard, but it was eliminated due to insufficient liquidity in the second half of last year.
Overseas revenue contributes more than ninety percent, and the growth momentum may be insufficient
Founded in 2000 and headquartered in Hong Kong, China, OrbusNeich is a global vascular interventional medical device innovation company, with production and R&D bases in China, the Netherlands and the United States, and branches all over the world. At present, OrbusNeich has more than 40 products approved for sale worldwide, including semi-compliant balloons, special catheters, scored balloons, non-compliant balloons, etc., covering all major processes in PCI surgery and PTA surgery, and the products are sold to more than 70 countries and regions around the world.
According to the announcement, OrbusNeich is expected to increase its profit attributable to the company's owners by more than 100% in 2023; Adjusted profit for the year will increase by more than 50% compared to FY2022.
According to the Zhitong Financial App, the highlight of Yeju Medical's business is its strong globalization ability, with overseas revenue accounting for nearly 95%. As we all know, it has been difficult for domestic high-value consumables companies to break through the overseas market, with high entry thresholds, fierce competition, high localization requirements, and high concentration of PCI and PTA balloon markets. Statistics show that 4 companies monopolize 88% of the market share of the Japanese PCI balloon market, and 6 companies monopolize 97% of the European PCI balloon market; 5 companies monopolize 97% of the European PTA balloon market.
However, OrbusNeich can compete with many medical device giants and occupy a major position in major international markets such as Europe, Japan, the United States, and China, which shows that its commercialization ability is good. In terms of sales volume in 2021, OrbusNeich PCI balloons ranked second in the Japanese market, fourth in the European market, and sixth in both China and the United States. OrbusNeich's PTA balloon ranked third in the Japanese market and fourth in the U.S. market.
With strong internationalization capabilities and low impact on the risk of domestic centralized procurement, Yeju Medical was once sought after by investors after listing. In the first three months of listing, the company's stock price rose by more than 40%.
However, a closer look at the operating data of its prospectus shows that the company seems to lack stamina.
As the largest business, coronary intervention balloons contribute more than 65% of the company's operating income. However, the revenue scale of this business has declined significantly in recent years. 6656 since 2018$40,000 slipped to 6,089 in 2020$70,000. In fact, the company's balloon production growth in the same period was not obvious, and in the context of production expansion, the capacity utilization rate of Yeju Medical continued to decline, from 83 in 20185% to 74 in 20202%, reflecting that the company's competitiveness needs to be improved, and the growth momentum is slightly insufficient.
It is not easy to develop the domestic market, and the overseas market may face an impact
For OrbusNeich Medical, it is indispensable to expand the company's revenue scale and increase the company's profits in the future, and to develop the growing domestic market. In the 2023 interim report, the company's revenue of only $13 million came from China, accounting for about 16% of the total revenue, and the domestic market still has room for growth.
However, the rumors brought about by the 90% drop in coronary stents are still vivid. The nationwide price reduction and centralized procurement of drug balloons is also an inevitable trend. It is not easy to develop in the domestic market by OrbusNeich Medical, which relies solely on balloon business.
It is worth noting that among the 13 products sold by OrbusNeich in the domestic market, 7 products have been included in the scope of centralized procurement. According to the results of public centralized procurement in the market, it can be seen that the bargaining efforts are not small. In December 2021, the Beijing-Tianjin-Hebei "3+N" Alliance announced the selected products for the linkage procurement of coronary drug balloon consumables. According to the Tianjin Municipal Medical Insurance Bureau, a total of 10 provinces participated in the centralized procurement, and the average drop in drug balloons was 7250% with an average price from 230,000 yuan to 060,000 yuan. If it is affected by centralized procurement in the future, it may have a great impact on OrbusNeich Medical.
The tremor brought about by centralized procurement is gradually transforming into the transformation and adjustment of real business, and enterprises that walk on one leg are always at risk, and domestic machinery companies are also looking for the next performance fulcrum. Innovative products and going overseas have become the consensus of domestic machinery enterprises. Both of them have undoubtedly had an impact on OrbusNeich Medical.
First of all, from the perspective of innovative products, in recent years, "interventional without implantation" products represented by drug balloons and degradable stents have become a new industry force.
In the global market, multinational companies such as B. Braun, Medtronic, and Boston Scientific are leading the way in the field of pharmaceutical balloons. Domestic companies such as Lepu Medical, Xianruida Medical-B (06669), Yinyi Biotechnology, Grand Pharmaceutical (00512), and Xinmai Medical also have many layouts.
Among them, the main drug balloon products currently on the market of Xinmai Medical and Xianruida belong to the scope of peripheral intervention, and have not yet been included in the coverage of centralized procurement by provincial alliances. In terms of biodegradable stents, Abbott, Baiduoli and Johnson & Johnson brands have developed well, and domestic companies such as Lepu Medical, Minimally Invasive Medical (00853), and Lifetech Medical are also continuing to make efforts.
Innovative products occupy market opportunities, making it more difficult for OrbusNeich to open up the domestic market.
In addition to innovative products, the expansion of overseas markets has also become an important direction for enterprises. This move directly impacted the sales "base camp" of Yeju Medical.
In fact, going overseas is not only the need for enterprises to become bigger and stronger, but also the encouragement of national policies. The Ministry of Industry and Information Technology's "14th Five-Year Plan" for the development of the medical equipment industry emphasizes that in 2025, there will be 6 8 companies among the top 50 in the global medical device industry.
In short, the highlight of Yeju Medical's investment is to occupy the opportunity to go overseas, and its performance is less affected by domestic centralized procurement. However, relying solely on the coronary intervention balloon business has made the company's growth ceiling low. In particular, OrbusNeich has achieved a certain market share in overseas markets. In addition, in terms of the domestic market, the multiple influences of centralized procurement and domestic machinery enterprises have made it difficult to develop the market. More importantly, with the encouragement of policies, vascular interventional device giants have deployed overseas markets, and the encroachment on the overseas market of Yeju Medical should not be underestimated. In addition, at present, the company has been excluded from the Hong Kong Stock Connect, and the liquidity of the capital market lags behind its peers, which can be described as worse for its development.