HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shanghai MicroPort Endovascula / Equity Bottom-Up

Shanghai MicroPort Endovascula (688016 CH)

<ul>
<li>The aortic product line would bring strong growth in 1-2 years. From 3 years or longer term, Endovascular’s peripheral vascular interventional devices would be the main driver for high growth.</li>
<li>We don’t think the centralized procurement would be a concern for the time being. As many products are or will apply for CE Mark, the progress of internationalization is promising.</li>
<li>The current valuation is very attractive. Due to the pandemic/lockdown in China and many external uncertainties, share price could go lower, but it's still a good company to invest in.</li>
</ul>


The aortic product line would bring strong growth in 1-2 years. From 3 years or longer term, Endovascular’s peripheral vascular interventional devices would be the main driver for high growth.
We don’t think the centralized procurement would be a concern for the time being. As many products are or will apply for CE Mark, the progress of internationalization is promising.
The current valuation is very attractive. Due to the pandemic/lockdown in China and many external uncertainties, share price could go lower, but it's still a good company to invest in.


Shanghai Microport Endovascular MedTech (688016.CH) 21/22Q1 - This Is a Company Worth Investing In

<ul>
<li>Although Endovastec has leading position in aortic products, the growth space of this field in China is relatively limited and is not enough to support the long-term development of Endovastec.</li>
<li>The lack of revolutionary blockbuster product/candidate with global pricing power as well as the current weak international business layout are also the concerns.</li>
<li>Our view is that <a href="https://www.smartkarma.com/entities/shanghai-microport-endovas-a" target="_blank" data-smartkarma-citation="entities:30310:1" rel="noopener">Shanghai Microport Endovascular MedTech (688016 CH)</a> (Endovastec) is a good company, but it is not as attractive as <a href="https://www.smartkarma.com/entities/lifetech-scientific-corp" target="_blank" data-smartkarma-citation="entities:13181:1" rel="noopener">Lifetech Scientific (1302 HK)</a> at the current stage.</li>
</ul>


Although Endovastec has leading position in aortic products, the growth space of this field in China is relatively limited and is not enough to support the long-term development of Endovastec.
The lack of revolutionary blockbuster product/candidate with global pricing power as well as the current weak international business layout are also the concerns.
Our view is that Shanghai Microport Endovascular MedTech (688016 CH) (Endovastec) is a good company, but it is not as attractive as Lifetech Scientific (1302 HK) at the current stage.


Shanghai Microport Endovascular MedTech (688016.CH) - Not as Attractive as Lifetech

Global Healthcare Analyst

Tina Banerjee

Shanghai HeartCare Medical Technology / Equity Bottom-Up

Shanghai HeartCare Medical Technology (6609 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-heartcare-medical-technology" target="_blank" data-smartkarma-citation="entities:32192:1" rel="noopener">Shanghai HeartCare Medical Technology (6609 HK)</a> has leadership positioning in China’s neuro-intervention medical device market. The company has an attractive product portfolio with large addressable market.</li>
<li>Core product, Captor is expected to earn revenue of RMB656 million in 2030. Patent infringement lawsuit against Medtronic regarding Heartcare’s core product Captor remains a major overhang on the stock.</li>
<li>Heartcare shares plunged 24% since its listing in August. The company aims to commercialize 10 products between 2022 and 2025. Investors with high-risk appetite can take position.</li>
</ul>



Shanghai HeartCare Medical Technology (6609 HK) has leadership positioning in China’s neuro-intervention medical device market. The company has an attractive product portfolio with large addressable market.
Core product, Captor is expected to earn revenue of RMB656 million in 2030. Patent infringement lawsuit against Medtronic regarding Heartcare’s core product Captor remains a major overhang on the stock.
Heartcare shares plunged 24% since its listing in August. The company aims to commercialize 10 products between 2022 and 2025. Investors with high-risk appetite can take position.


Shanghai HeartCare Medcl(6609 HK): Comprehensive Stroke Produce Portfolio Comes with a Pinch of Salt

<ul>
<li>With both strong innovation and internationalization capability, Lifetech is more resistant to risks and have greater development space and long-term value, which is not common in China healthcare industry. </li>
<li>The biggest concerns currently are the policy risks and the potential deterioration of international relations.</li>
<li>But overall, Lifetech is a still company worth investor’s attention. Our view is that its future valuation would be higher than that of <a href="https://www.smartkarma.com/entities/shanghai-microport-endovas-a" target="_blank" data-smartkarma-citation="entities:30310:1" rel="noopener">Shanghai Microport Endovascular MedTech (688016 CH)</a>.</li>
</ul>


With both strong innovation and internationalization capability, Lifetech is more resistant to risks and have greater development space and long-term value, which is not common in China healthcare industry. 
The biggest concerns currently are the policy risks and the potential deterioration of international relations.
But overall, Lifetech is a still company worth investor’s attention. Our view is that its future valuation would be higher than that of Shanghai Microport Endovascular MedTech (688016 CH).


Lifetech Scientific (1302.HK) - A “dark Horse” in China Innovative Device Industry

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/broncus-holding-corporation" target="_blank" data-smartkarma-citation="entities:33315:1" rel="noopener">Broncus (BRC HK)</a> is a medical device company focused on the development of interventional pulmonology products. Broncus has 17 products and major product candidates under various development stages. The core products are InterVapor, the world’s first and only thermal vapour energy ablation system to treat lung diseases and RF-II, which is the only radiofrequency ablation system that specifically targets lung cancer.Broncus has a credible management team with a commendable commercialisation track record and blue-chip backers. Pre-IPO investors include Qiming Venture Capital, DiNovA Capital, Lake Bleu Capital, FountainVest and <a href="https://www.smartkarma.com/entities/intuitive-surgical-inc" target="_blank" data-smartkarma-citation="entities:15853:1" rel="noopener">Intuitive Surgical (ISRG US)</a>. Broncus is pre-marketing an HKEx IPO to raise $300 million, according to press reports. Broncus currently generates revenue primarily from navigation systems (LungPoint Plus, LungPro, LungPoint and planners) where it ranks second in China with a market share of 37.5% measured by sales revenue for the years ended 2018, 2019 and 2020, according to Frost &amp; Sullivan. However, the market is relatively small as the market size of interventional pulmonology diagnostic consumables in China reached just $26.3 million in 2020, according to Frost &amp; Sullivan. <div class="content-highlight">Broncus’s core products aim for a large addressable market by targeting the pulmonary disease treatment market. The core products' differentiation in terms of technology and target indications increases the probability of success. Overall, we believe that Broncus’ product portfolio is attractive. </div>

Broncus (BRC HK) is a medical device company focused on the development of interventional pulmonology products. Broncus has 17 products and major product candidates under various development stages. The core products are InterVapor, the world’s first and only thermal vapour energy ablation system to treat lung diseases and RF-II, which is the only radiofrequency ablation system that specifically targets lung cancer.Broncus has a credible management team with a commendable commercialisation track record and blue-chip backers. Pre-IPO investors include Qiming Venture Capital, DiNovA Capital, Lake Bleu Capital, FountainVest and Intuitive Surgical (ISRG US). Broncus is pre-marketing an HKEx IPO to raise $300 million, according to press reports. Broncus currently generates revenue primarily from navigation systems (LungPoint Plus, LungPro, LungPoint and planners) where it ranks second in China with a market share of 37.5% measured by sales revenue for the years ended 2018, 2019 and 2020, according to Frost &amp; Sullivan. However, the market is relatively small as the market size of interventional pulmonology diagnostic consumables in China reached just $26.3 million in 2020, according to Frost &amp; Sullivan. Broncus’s core products aim for a large addressable market by targeting the pulmonary disease treatment market. The core products' differentiation in terms of technology and target indications increases the probability of success. Overall, we believe that Broncus’ product portfolio is attractive. 

China

LifeTech Scientific Corporation specializes in the research, development, manufacturing, and sales of minimally invasive interventional medical devices for cardio-cerebrovascular and peripheral vascular diseases. The company offers solutions for structural heart diseases, peripheral vascular diseases, bradycardia, and neurovascular conditions, including LAA closure systems, congenital heart disease occluders, vena cava filters, and stent grafts. LifeTech Scientific also possesses an innovative iron-based bioabsorbable material technology platform. The company was established in Shenzhen, China, in 1999.

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LifeTech Scientific (1302 HK)

Shanghai Microport Endovascular MedTech (688016.CH) 21/22Q1 - This Is a Company Worth Investing In

Endovascular’s product lines and promising internationalization will bring strong growth. The centralized procurement wouldn't be a concern for the...

Xinyao (Criss) Wang

Shanghai Microport Endovascular MedTech (688016.CH) - Not as Attractive as Lifetech

This insight analyzed Endovastec about the industry characteristics of aortic and peripheral products, the business layout, and the concerns on...

Xinyao (Criss) Wang

Shanghai HeartCare Medcl(6609 HK): Comprehensive Stroke Produce Portfolio Comes with a Pinch of Salt

Comprehensive and innovative product portfolio addressing large patient pool is the key positive for the company. However, ongoing patent...

Tina Banerjee