SINOMED(688108) 国泰君安·2024-08-01 23:31Investment Rating and Core Views - The report initiates coverage on Sinomed with an Overweight rating and a target price of 10.37 CNY, representing a potential upside of 25.5% from the current price of 8.26 CNY [3][6] - The core investment thesis revolves around the strong recovery of Sinomed's coronary business and the differentiated products in the neurovascular intervention market, which are expected to drive growth [1][6] - The company's coronary business has rebounded strongly, with sales growing 99% YoY in 2023, driven by new stent products that won bids in the 2022 national procurement [6][43] - The neurovascular intervention business is poised for growth, supported by a comprehensive product portfolio and differentiated flagship products, with the market expected to grow at a CAGR of 28.9% from 2020 to 2026E [6][57] Financial Projections and Valuation - Revenue is projected to grow from 476 million CNY in 2024E to 934 million CNY in 2026E, with a CAGR of 38.7% [6][10] - Net profit is expected to turn positive in 2024E at 3 million CNY, and grow significantly to 119 million CNY in 2026E, with a CAGR of 274.2% [6][10] - The valuation is based on a PS multiple of 9X, derived from comparable companies in the medical device sector, resulting in a target price of 10.37 CNY [13][14] Coronary Business Recovery - Sinomed's coronary business has recovered strongly, with coronary stent sales growing 99.1% YoY in 2023, driven by new products that won bids in the 2022 national procurement [6][43] - The company's HT Supreme and HT Infinity stents were successfully bid in the 2022 national procurement, with a combined purchase volume of nearly 50,000 units, and have been selected by over 1,000 hospitals [43][44] - The company's coronary balloon products are also expanding, with the first domestically produced spiked balloon approved in September 2023, which won the top bid in the "3+N" alliance procurement, expected to contribute 45 million CNY in sales in 2024E [10][48] Neurovascular Intervention Market Opportunity - The neurovascular intervention market in China is in a rapid growth phase, with the number of procedures expected to grow from 161,000 in 2020 to 741,000 in 2026E, at a CAGR of 28.9% [6][57] - Sinomed has a comprehensive product portfolio in the neurovascular space, including intracranial stents, balloons, and thrombectomy devices, with 13 products approved in China as of May 2024 [61] - The company's NOVA stent, the only drug-eluting intracranial stent in China, is in a rapid growth phase, with sales expected to grow 16% YoY in 2024E [10][12] - The company is also developing a self-expanding drug-eluting intracranial stent (COMETIU), which is expected to be approved by the end of 2024 and contribute 56 million CNY in sales in 2025E [10][12] Competitive Advantages and Catalysts - Sinomed has a strong R&D pipeline, with 22 products in development across coronary, neurovascular, and structural heart disease fields, supported by 160 global patents [28] - The company's differentiated products and early-mover advantage in the neurovascular market position it well to capture market share as the industry grows [6][61] - Key catalysts include the approval of new products and faster-than-expected sales growth of recently launched products, particularly in the neurovascular intervention market [6][61]