研究报告全文：MN29Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateAKMedical1789HKHighergrowthcertaintyin2023ETargetPriceHK1231DespitethenegativeimpactofCOVID-19onsurgerydemandfororthopedicPreviousTPHK1144implantsAKMedicalreportedFY22ErevenueofRMB10520mnup382YoYUpDownside337primarilydrivenbytherevenuegrowthinhipandkneeimplants447YoYaftertheVBPaswellastheICOScustomizedproducts1013YoYGPMwasCurrentPriceHK921605-51pptduetothepricereductionafterVBPThankstothesignificantChinaHealthcarereductioninsellingexpenseratioaftertheVBPattributablenetprofitincreasedby1211YoYinFY225944aboveCMBIconsensusestimatesJillWUCFA85239000842StrongvolumegrowthafterVBPmorethanoffsetthepricecutIn2022jillwucmbicomhksalesvolumeoftheprimaryhipsystemincreasedby81YoYandtheprimarykneesystemincreasedby130YoYattributabletotheincreasingCathyWANGdemandinprimaryhipandkneereplacementoperationsafterVBPAsa85239161729resultAKMedicalstotalrevenuefromhipandkneeimplantsgrewby447cathywangcmbicomhkYoYtoRMB9214mnMoreoverthankstoVBPAKMedicalhassuccessfullyStockDatacoveredover90ofprovincialhospitalsnationwideWithincreasingmarketMktCapHKmn102761shareinmiddleandhigh-endmarketswhichhavegreaterdemandforkneeAvg3mthstoHKmn93replacementthanlow-endmarketweexpectsustainedsalesgrowthof52wHighLowHK1030382primarykneesysteminthecomingyearsTotalIssuedSharesmn11158SourceFactSetHigh-marginproductssafefromVBPtograduallyunleashgrowthpotentialAKMedicalistheonlyoneinChinawith3DprintingcustomizedShareholdingStructureregistrationcertificatesandcontinuousexpansioninitsInnovativeXimalayaLimited453CustomizedOrthopedicSolutionICOSservicesAsoftheendof2022theGaolingFund64SourceHKExCompanyhasobtainedtwoClassIII3D-printedcustomizedproductregistrationcertificatesand54customizedproductfilingswithcooperatingSharePerformancehospitalsGrowingdemandinpersonizedtreatmentandbroadeningAbsoluteRelativeapplicationprospectsdroveAKMedicalsrevenuegrowthfromcustomized1-mth-17-17productsandservicesby1013YoYtoRMB470mnin2022Weexpectthe3-mth-54-49CompanysICOSincometoreachRMB704mnin2023EBesideswith6-mth23879expandedcoverageofprovincialhospitalsandenrichedproductportfoliosSourceFactSetsalesofrevisionproductswillachievesubstantialgrowthWebelievethe12-mthPricePerformanceincreasingproportionofrevenuefromthesehigh-marginproductswillenhanceAKMedicalsprofitabilityinthelongtermExpectorthopedicsurgerydemandrecoveryin2023ESeveraldomestichospitalsreportedasurgeinsurgeryvolumesinceFeb2023duetothepent-upsurgerydemandduringtheCOVID-19in2022Weseeorthopedicimplantasanon-emergencysurgerytorecoverrapidlyin2023EpostadecreaseinthevolumeduringCOVID-19pandemicSourceFactSetMaintainBUYWeexpectAKMedicalsrevenuetogrowataCAGRof312from2023Eto2025EWeraisedourTPtoHK1231basedona9-yearDCFRelatedreport1AcceleratingimportsubstitutionpositivemodelWACC1073terminalgrowthrate30toreflectimprovingoutlookof2023Eprofitabilitythankstothestronggrowthofhigh-marginproductsinthelongtermEarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn7611052141418702434YoYgrowth265382344323302NetprofitRMBmn93205272367491YoYgrowth7051211327351337EPSReportedRMB008018024033044YoYgrowth7081218320351337PEx940424321238178Yield0307081114ROE4691111135159NetgearingNetcashNetcashNetcashNetcashNetcashSourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk29Mar2023Figure1EarningsrevisionNewOldDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue141418702434144419002424-21-1604Grossprofit8551141149788111501454-29-0829Operatingprofit300412558301423575-04-26-29Netprofit272367491273377505-04-25-28EPSRMB024033044024034045-04-25-28Grossmargin605061006150610060506000-050ppt050ppt150pptOperatingmargin212122032291208522262371036ppt-023ppt-080pptNetMargin192319642017189019822085033ppt-018ppt-068pptSourceCompanydataCMBIGMestimatesFigure2Risk-adjustedDCFvaluationDCFValuationinRmbmn2023E2024E2025E2026E2027E2028E2029E2030E2031EEBIT300412558669796940109912751467Taxrate151515151515151515EBIT1-taxrate25535047456967779993510841247DA7474748494104115125135-Changeinworkingcapital-210-221-245-277-311-345-379-413-446-Capex-50-50-50-57-63-70-77-84-91FCFF69154253319397488593711844Terminalvalue11257FCFTerminalvalue6915425331939748859371112102Terminalgrowthrate30WACC1073CostofEquity135CostofDebt50EquityBeta105RiskFreeRate300MarketRiskPremium100TargetDebttoAssetratio300EffectiveCorporateTaxRate150PVofenterprisevalueRMBmn11032NetdebtRMBmn646MinorityinterestsRMBmn0EquityvalueRMBmn11678EquityvalueHKmn13738ofsharesoutstandingmn1116PricepershareHK1231SourceCMBIGMestimatesFigure3SensitivityanalysisWACC1144973102310731123117340169715271383126011553515781429130211921097Terminalgrowthrate30147713451231113310462513901272116910801001201314120811141032960Figure4CMBIGMestimatesvsconsensusCMBIGMConsensusDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue141418702434141318202256002779GrossProfit85511411497838108211982054250OperatingProfit3004125582934066002214-71Netprofit2723674912653605422620-94EPSRMB0240330440240320492422-102GrossMargin605061006150593259465310118ppt154ppt840pptOperatingMargin212122032291207622322660044ppt-028ppt-368pptNetMargin192319642017187519772402047ppt-013ppt-385pptSourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE229Mar2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnRevenue10357611052141418702434Costofgoodssold321262416558729937Grossprofit71549963685511411497Operatingexpenses346400416555729939Sellingexpense154187180254337438Adminexpense83105118155196243RDexpense105113111155206268Others467101010Operatingprofit36999220300412558NetInterestincomeexpense8920202020Pre-taxprofit377109240320432578Incometax631636486587Aftertaxprofit31493205272367491Minorityinterest000000Attributablenetprofit31493205272367491BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnCurrentassets190319342065229126383087Cashequivalents713476626643722869Accountreceivables451388467542666800Inventories361423402535679847Othercurrentassets378648570570570570Non-currentassets624671709685661637PPE364382436424412401Deferredincometax517675757575Intangibles768085736048Goodwill133132113113113113Othernon-currentassets000000Totalassets252726052774297632983724Currentliabilities418489436434481538Short-termborrowings000000Accountpayables14693155153200257Taxpayable425223232323Othercurrentliabilities230345258258258258Non-currentliabilities668486868686Deferredincome121213131313Othernon-currentliabilities547273737373Totalliabilities484574522520567624Sharecapital999999Otherreserves203320222234243827143082Totalshareholdersequity204320322244244827233091Minorityinterest000000Totalequityandliabilities252726052766296832903715PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE329Mar2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecRMBmnOperatingProfitbeforetaxation377109240320432578Depreciationamortization587374747474Taxpaid452936486587Changeinworkingcapital1863121210221245Others1720202020Netcashfromoperations205177238116201300InvestingCapitalexpenditure3517650505050Netproceedsfromdisposalofshort-term54810390000investmentsOthers54281820202020Netcashfrominvesting35629730303030FinancingDividendpaid7537606892123Netborrowings200000Proceedsfromshareissues70100000Others13640000Netcashfromfinancing612101606892123NetchangeincashCashatthebeginningoftheyear277713476626643722Exchangedifference24160000Cashattheendoftheyear713476624643722869GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue117265382344323302Grossprofit111301275344334313Operatingprofit1697301212363374354EBITDA243596706271300300EBIT1697301212363374354Netprofit1767051211327351337PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin690656605605610615Operatingmargin356131209212220229EBITDAmargin413226280265260260ReturnonequityROE1544691111135159GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecNetdebttoequityx040303030303Currentratiox464047535557Receivableturnoverdays127320101483140013001200Inventoryturnoverdays335654543624350034003300Payableturnoverdays127816601089100010001000VALUATION2020A2021A2022A2023E2024E2025EYE31DecPE274940424321238178Divyield040307081114EVSales7710776574332EVEBIT215817366268193140EVEBITDA186471274215164123SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE429Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE5