HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Lepu Medical Technology A / Equity Capital Markets

<ul>
<li>Lepu suffered from the negative impact of VBP on drug/medical consumables, and its share price has yet to recover. We are not optimistic about the outlook of the traditional businesses.</li>
<li>Lepu’s expansion mainly relies on continuous M&amp;A. Whether these diversified businesses will produce synergies and how much performance they will contribute need to be tested by time and the market.</li>
<li>Excessive epitaxial expansion may not be a long-term solution. Lepu needs to focus more on endogenous growth and R&amp;D,which is good for sustainable long-term growth. Such business transformation takes time.</li>
</ul>


Lepu suffered from the negative impact of VBP on drug/medical consumables, and its share price has yet to recover. We are not optimistic about the outlook of the traditional businesses.
Lepu’s expansion mainly relies on continuous M&amp;A. Whether these diversified businesses will produce synergies and how much performance they will contribute need to be tested by time and the market.
Excessive epitaxial expansion may not be a long-term solution. Lepu needs to focus more on endogenous growth and R&amp;D,which is good for sustainable long-term growth. Such business transformation takes time.


Pre-IPO Lepu Medical Technology - Lepu Is in a Difficult Position and Turning It Around Takes Time

Equity Bottom-Up

Shanghai MicroPort MedBot Group / Equity Bottom-Up

<ul>
<li>To achieve massive sales expansion, surgical robots and consumables have to reduce price largely to enter NRDL reimbursement. This is at odds with expectations that they will generate high profits.</li>
<li>The actual market share gained and revenue generated by Medbot may fall far short of expectations, resulting in an inability to cover years of rapid growth in R&amp;D/selling/administrative expenses.</li>
<li>Due to uncertainties on commercialization and profitability outlook, Medbot lacks an “anchor” for valuation.The large fluctuation in share price would continue. Surgical robots are not a good business for now.</li>
</ul>


To achieve massive sales expansion, surgical robots and consumables have to reduce price largely to enter NRDL reimbursement. This is at odds with expectations that they will generate high profits.
The actual market share gained and revenue generated by Medbot may fall far short of expectations, resulting in an inability to cover years of rapid growth in R&amp;D/selling/administrative expenses.
Due to uncertainties on commercialization and profitability outlook, Medbot lacks an “anchor” for valuation.The large fluctuation in share price would continue. Surgical robots are not a good business for now.


MicroPort MedBot (2252.HK)- Lack an “anchor” for Valuation Due to Uncertainties in Commercialization

<ul>
<li>Due to the centralized procurement in PRC market and decreasing volume of operations in overseas markets during pandemic, <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>’s 2021 performance missed expectations. </li>
<li>Even if Microport could finally digest the negative impact of centralized procurement, its “unique” development mode would still put pressure and uncertainties on future performance/outlook, leading to lower-than-expected results.</li>
<li>Our earnings estimate of Microport in 2022 could be about HK$-1.7, and revenue estimate could be about HK$7.3 billion. It’s quite possible that the Company will not end up profitable.</li>
</ul>


Due to the centralized procurement in PRC market and decreasing volume of operations in overseas markets during pandemic, Microport Scientific (853 HK)’s 2021 performance missed expectations. 
Even if Microport could finally digest the negative impact of centralized procurement, its “unique” development mode would still put pressure and uncertainties on future performance/outlook, leading to lower-than-expected results.
Our earnings estimate of Microport in 2022 could be about HK$-1.7, and revenue estimate could be about HK$7.3 billion. It’s quite possible that the Company will not end up profitable.


Microport Scientific (853.HK)-The “unique” Development Mode Leads to Lower-Than-Expected Performance

<ul>
<li>The combination of FFR and IMR can provide a complete functional evaluation from epicardial arteries to myocardial microcirculation,pushing the precise diagnosis and treatment of coronary disease into a new era.</li>
<li>Rainmed’s caFFR System and caIMR System have obvious technical and first-mover advantages; The CE certificate also opens up the imagination space of product commercialization (such as developing markets).</li>
<li>However, the concerns on current sales model, market acceptance, medical insurance coverage, cash flow pressure and market sentiment when IPO should also not be neglected. </li>
</ul>


The combination of FFR and IMR can provide a complete functional evaluation from epicardial arteries to myocardial microcirculation,pushing the precise diagnosis and treatment of coronary disease into a new era.
Rainmed’s caFFR System and caIMR System have obvious technical and first-mover advantages; The CE certificate also opens up the imagination space of product commercialization (such as developing markets).
However, the concerns on current sales model, market acceptance, medical insurance coverage, cash flow pressure and market sentiment when IPO should also not be neglected. 


Pre-IPO Rainmed Medical - The Industry, the Business and the Concerns

MicroPort NeuroTech / Equity Capital Markets

<ul>
<li>The advantages of NeuroTech are mainly reflected in the comprehensive product portfolio and stable product performance, with higher gross margin, stronger cost control ability and first-mover advantage than its peers.</li>
<li>The major concerns here are the domestic shrinking market size due to the centralized procurement, the fierce market competition and the pain points on its sales model.</li>
<li>In terms of valuation, our view is that NeuroTech’s valuation could be higher than that of the peers such as Zylox-Tonbridge, HeartCare Medical, Peijia Medical and Sino Medical.</li>
</ul>


The advantages of NeuroTech are mainly reflected in the comprehensive product portfolio and stable product performance, with higher gross margin, stronger cost control ability and first-mover advantage than its peers.
The major concerns here are the domestic shrinking market size due to the centralized procurement, the fierce market competition and the pain points on its sales model.
In terms of valuation, our view is that NeuroTech’s valuation could be higher than that of the peers such as Zylox-Tonbridge, HeartCare Medical, Peijia Medical and Sino Medical.


Pre-IPO MicroPort NeuroTech - The Industry, the Business and the Concern

China

Microport Scientific Corp. manufactures interventional and minimally invasive devices for keyhole surgery. The Company's products are used to treat vascular diseases and is developing devices to treat diabetes and orthopedic diseases.

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Microport Scientific (853 HK)

Pre-IPO Lepu Medical Technology - Lepu Is in a Difficult Position and Turning It Around Takes Time

Lepu will be listed in Swiss, but it still suffers from declining performance due to VBP. Its R&D is weak and aggressive M&A carries more risks...

Xinyao (Criss) Wang

MicroPort MedBot (2252.HK)- Lack an “anchor” for Valuation Due to Uncertainties in Commercialization

Medbot lacks an “anchor” for valuation due to uncertainties on commercialization/profitability outlook. Surgical robots are not a good business for...

Xinyao (Criss) Wang