Report
EUR 88.49
For Business Accounts Only
In our previous note, we discussed that the company experienced strong growth in the past six years during which the company's revenue tripled. We believe that its future growth will be driven by the growing minimally invasive surgery market (20-30% p.a.) and the replacement of international products by their domestic peers. The key risk is the central procurement that targets high-margin medical devices which will force companies to cut product prices in order to join the reimbursement scheme. Unlike other medical devices listings in Hong Kong, the company's management team does not have impressive working experience prior to founding the company. We also note that the company has a strong cash flow plus a flexible setting for production capacities. Thus, it does not really have a strong need for capital raising to fund expansion.
In this note, we compare Kangji Medical to medical device peers listed in Hong Kong and China A-share market. We note that Kangji Medical is a cash cow with financial metrics exceeding its peers by big margins. The only downside we find in our comparison is that it is underspending on the R&D front. We have a preliminary valuation for Kangji at USD 2.6 bn.
Kangji Medical (康基医疗) Pre-IPO - Superior financial metrics vs peers, warrants a premium
Kangji Medical is a domestic leader in minimally invasive surgery devices. It has three main product types, trocars, polymer ligation clips, and forceps.In our previous note, we discussed that the company experienced strong growth in the past six years during which the company's revenue tripled. We believe that its future growth will be driven by the growing minimally invasive surgery market (20-30% p.a.) and the replacement of international products by their domestic peers. The key risk is the central procurement that targets high-margin medical devices which will force companies to cut product prices in order to join the reimbursement scheme. Unlike other medical devices listings in Hong Kong, the company's management team does not have impressive working experience prior to founding the company. We also note that the company has a strong cash flow plus a flexible setting for production capacities. Thus, it does not really have a strong need for capital raising to fund expansion.
In this note, we compare Kangji Medical to medical device peers listed in Hong Kong and China A-share market. We note that Kangji Medical is a cash cow with financial metrics exceeding its peers by big margins. The only downside we find in our comparison is that it is underspending on the R&D front. We have a preliminary valuation for Kangji at USD 2.6 bn.
Underlying
Kangji Medical Holdings Ltd
Provider
Aequitas Research
Aequitas Research is a leading ECM research firm with a focus on IPOs and placements/follow-on offerings across the Asia Pacific with deal size of over USD100m.
Since 2015, we have covered 400+ IPOs and 450+ placements with a hit rate of 73% and 65%, respectively. We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic analysis.
Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis. We also provide a more quant driven analysis on placement/follow-on offerings.
Markets that we cover include:
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Ke Yan
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