Lepu Medical(300003) -·2025-01-17 02:53Investment Rating - The report maintains a "Sell" rating for Lepu Medical with a target price of RMB 10.40, reflecting a downside potential from the current price of RMB 10.76 [4][6][23]. Core Insights - The revenue for FY24 is expected to exceed RMB 6 billion, with Q424 showing signs of stabilization compared to Q324. However, the overall outlook for FY25 remains uncertain due to factors such as layoffs and related costs [1]. - The medical device segment, particularly structural heart and PCI (Percutaneous Coronary Intervention) businesses, is anticipated to drive growth in FY25, while the pharmaceutical and healthcare management segments are expected to face challenges [2][3]. - The pharmaceutical segment's revenue has declined significantly since Q224, with a slight recovery in Q424. Future growth is dependent on ongoing product development, particularly in diabetes and weight-loss drugs [3]. Summary by Sections Medical Devices - Revenue for the medical device segment in the first three quarters of 2024 was RMB 25.63 billion, down 10.48% year-on-year, primarily due to the decline in IVD (In Vitro Diagnostics) business. However, PCI and structural heart businesses showed growth, with revenues of RMB 12.13 billion and RMB 3.85 billion, respectively [2]. - The structural heart business is expected to double its revenue from approximately RMB 5 billion in FY24, driven by products like TAVR and biodegradable occluders [2]. Pharmaceuticals - The pharmaceutical segment's revenue fell to RMB 14.76 billion in the first three quarters of 2024, with a slight recovery in Q424. The growth in this segment is projected to be modest in FY25 due to high base effects from O124 [3]. - Key growth drivers in the medium to long term include ongoing clinical trials for diabetes and weight-loss drugs, with MWN101's Phase II trials nearing completion [3]. Valuation - The report uses a DCF valuation method, maintaining a target price of RMB 10.40, which corresponds to a PE ratio of 15.8x for FY25 and 14.3x for FY26 [4][6].