HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Zylox-Tonbridge Medical Technology / Equity Bottom-Up

<ul>
<li>Zylox is a beneficiary of VBP and it has turned losses into profits. 2024 full-year revenue could be up 40-50% YoY. Net profit could be close to RMB100 million.</li>
<li>Whether in terms of the number of products on the market or the efficiency of R&amp;D, Zylox's performance is superior to peers.Its valuation is expected to be higher than peers.</li>
<li>We’re in a bear market, together with weak liquidity, Zylox's valuation doesn’t fully reflect its strong fundamentals. So, while this is a good company, investors may need to be patient.</li>
</ul>


Zylox is a beneficiary of VBP and it has turned losses into profits. 2024 full-year revenue could be up 40-50% YoY. Net profit could be close to RMB100 million.
Whether in terms of the number of products on the market or the efficiency of R&amp;D, Zylox's performance is superior to peers.Its valuation is expected to be higher than peers.
We’re in a bear market, together with weak liquidity, Zylox's valuation doesn’t fully reflect its strong fundamentals. So, while this is a good company, investors may need to be patient.


Zylox-Tonbridge Medical Technology (2190.HK) - A Good Alpha-Generating Opportunity for Investors

Equity Capital Markets

Zylox-Tonbridge Medical Technology / Equity Capital Markets

<p>On March 23, <a href="https://www.smartkarma.com/entities/zylox-tonbridge-medical-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32974:1" rel="noopener">Zylox-Tonbridge Medical Technology (ZYL HK)</a> submitted its listing application to the Hong Kong Stock Exchange and plans to be listed on the main board. Zylox-Tonbridge was founded in 2012. Since its inception, the Company has adopted and executed the strategic business model of developing innovative medical devices and solutions, focusing on the neuro- and peripheral-vascular interventional medical device market in China. The following mainly included insights on industry characteristics, business analysis and financial position. </p>

On March 23, Zylox-Tonbridge Medical Technology (ZYL HK) submitted its listing application to the Hong Kong Stock Exchange and plans to be listed on the main board. Zylox-Tonbridge was founded in 2012. Since its inception, the Company has adopted and executed the strategic business model of developing innovative medical devices and solutions, focusing on the neuro- and peripheral-vascular interventional medical device market in China. The following mainly included insights on industry characteristics, business analysis and financial position. 

Pre-IPO Zylox-Tonbridge Medical Technology - Promising Market with Challenges

Acotec Scientific Holdings / Equity Bottom-Up

<ul>
<li>Acotec’s 2023 performance was unsatisfactory. Core products suffered weak growth. Positive trend of continuing to optimize revenue structure was broken. Sales of latecomers’ competing products would expand rapidly in 2024/2025. </li>
<li>Revenue proportion in overseas markets was still below 5% in 2023. If no highlights in Acotec’s cooperation with Boston Scientific in 2024, this collaboration could be considered a failure.</li>
<li>Due to VBP, margin could further decline. If it's just the current situation, then Acotec is not as good as Zylox-Tonbridge. So, its valuation should also be lower than Zylox-Tonbridge.</li>
</ul>


Acotec’s 2023 performance was unsatisfactory. Core products suffered weak growth. Positive trend of continuing to optimize revenue structure was broken. Sales of latecomers’ competing products would expand rapidly in 2024/2025. 
Revenue proportion in overseas markets was still below 5% in 2023. If no highlights in Acotec’s cooperation with Boston Scientific in 2024, this collaboration could be considered a failure.
Due to VBP, margin could further decline. If it's just the current situation, then Acotec is not as good as Zylox-Tonbridge. So, its valuation should also be lower than Zylox-Tonbridge.


Acotec Scientific Holdings (6669.HK) - The Company Is Now In Trouble

<ul>
<li>The Beijing Medical Insurance Bureau issued a notice soliciting opinions on the linkage program of DRG payment and VBP policy in the city, involving sports medicine, neuro-intervention, and electrophysiology.</li>
<li>The basic logic of CXO is that there should be no significant fluctuations with the success or failure of a specific drug, unless this drug significantly increases total medical expenditure.</li>
<li>
<a href="https://www.smartkarma.com/entities/zylox-tonbridge-medical-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32974:1" rel="noopener">Zylox-Tonbridge Medical Technology (2190 HK) </a>achieved high performance growth in 2022, and is a beneficiary of centralized procurement policy at the current stage.However, it still has to face some challenges.</li>
</ul>


The Beijing Medical Insurance Bureau issued a notice soliciting opinions on the linkage program of DRG payment and VBP policy in the city, involving sports medicine, neuro-intervention, and electrophysiology.
The basic logic of CXO is that there should be no significant fluctuations with the success or failure of a specific drug, unless this drug significantly increases total medical expenditure.

Zylox-Tonbridge Medical Technology (2190 HK) achieved high performance growth in 2022, and is a beneficiary of centralized procurement policy at the current stage.However, it still has to face some challenges.


China Healthcare Weekly (May.19) - "Hedge Logic" Of CXO, Beijing's DRG+VBP Policy, Zylox-Tonbridge

<ul>
<li>With the launch of new products and their accelerated admission to hospitals, Acotec's revenue streams become more diversified, which would enhance its own risk resistance ability and core competitiveness.</li>
<li>Considering market size/increasing competition, Acotec’s growth ceiling is obvious if relies solely on domestic market. It becomes crucial whether Boston Scientific's acquisition would bring expected value or have other intentions.</li>
<li>How much room for improvement in future valuation depends on Acotec's performance in overseas markets. After all, if there is no internationalization breakthrough, Acotec's valuation logic would not be reshaped.</li>
</ul>


With the launch of new products and their accelerated admission to hospitals, Acotec's revenue streams become more diversified, which would enhance its own risk resistance ability and core competitiveness.
Considering market size/increasing competition, Acotec’s growth ceiling is obvious if relies solely on domestic market. It becomes crucial whether Boston Scientific's acquisition would bring expected value or have other intentions.
How much room for improvement in future valuation depends on Acotec's performance in overseas markets. After all, if there is no internationalization breakthrough, Acotec's valuation logic would not be reshaped.


Acotec Scientific (6669.HK) - What Value Boston Scientific Will Bring Is Crucial to Future Valuation

China

Leading player in the neuro- and peripheral-vascular interventional medical device market in China.

Zylox-Tonbridge Medical Technology (2190 HK)

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Zylox-Tonbridge Medical Technology (2190 HK)