研究报告全文：MN24Aug2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateAKMedical1789HKSolidgrowthdrivenbyincreasingnon-VBPsalesTargetPriceHK8461H23earningswasinlinewithCMBIandconsensusestimatesAKMedicalPreviousTPHK1231reported1H23revenueofRMB6487mnup221YoYprimarilydrivenbytheUpDownside487significantrevenuegrowthofkneereplacementimplantsandnon-VBPproductsCurrentPriceHK569GrossprofitwasRMB3385mnup98YoYGrossprofitmarginfell18pptsto619vs637in1H22duetotheimplementationofnationalVBPofjointChinaHealthcareimplantssinceApril2022AttributablenetprofitwasRMB1326mnup52JillWUCFAYoYandtheattributablenetprofitmargindroppedby33pptsto204in1H2385239000842vs237in1H22mainlyduetothelowerGPMandincreasedadministrativejillwucmbicomhkexpenserate116in1H23vs103in1H22CathyWANGRobustgrowthinkneereplacementimplantsThankstothesustained85239161729marketsharegainfromforeignbrandsafterthenationaljointVBPandthecathywangcmbicomhkorthopedicsurgerydemandrecoverysalesvolumeoftheprimarykneesystemincreasedby107YoYSalesofkneeunicondylereplacementStockDatasystemwhichisanewpartialkneeproductapprovedinJuly2022reachedMktCapHKmn63797Avg3mthstoHKmn208RMB338mnin1H23AsaresultAKMedicalsrevenuefromknee52wHighLowHK1108558replacementimplantssurgedby647YoYtoRMB2110mnin1H23TotalIssuedSharesmn11212MoreoverAKMedicalcontinuedtopenetrateintohigher-tierhospitalsSourceFactSetApproximately16oftheimplantvolumesoccurredinprovincialhospitalsShareholdingStructurein1H23upfrom10in1H22WeexpectthistrendwillfurtherdrivetheXimalayaLimited453strongsalesgrowthofkneereplacementimplantsincomingyearsGaolingFund64SourceHKExImprovedrevenuemixwithincreasingproportionofrevenuefromhigh-marginnon-VBPproductsAKMedicalhasacomprehensiveSharePerformanceorthopedicimplantsportfoliosincludingvariousproductsthataresafefromAbsoluteRelativeVBPsuchasrevisionandreconstructionproducts3D-printedspinal1-mth-202-1473-mth-256-190implantspartialkneeproductsandcustomizedproductsICOSetcThe6-mth-421-339domesticsalesofrevisionproductsgrewbyover60YoYin1H23SourceFactSetcontributing26oftheCompanystotaldomesticrevenueTheICOS12-mthPricePerformanceproductsrealizedRMB278mnofsaleswithfourNMPA-approved3D-printingcustomizedproductsand62customizedproductsfilingswithcooperatinghospitalsup315YoYin1H23Asaresult48ofthedomesticrevenuewasfromthenon-VBPproductsin1H23comparedtoapproximately36in1H22Besidestheoverseasmarketcontinuedstronggrowthmomentumandtheoverseasrevenueincreasedby783YoYtoRMB1135mnin1H23Thuswethink568ofAKMedicalstotalrevenuewasnotVBP-relevantwhilecontributedhighermarginthanVBPproductsSourceFactSetValuationKeyrisksTofactorinthechallengingbusinessenvironmentinChinawerevisedourTPtoHK846basedona9-yearDCFmodelWACC1108terminalgrowthrate20EarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn7611052136817772315YoYgrowth265382300299303NetprofitRMBmn93205269342449YoYgrowth7051211312274312EPSReportedRMB008018024031040YoYgrowth7081218298274312PEx581262202158121Yield0411121621ROE4691110127147Netgearing269280244228220SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk24Aug2023Figure1EarningsrevisionNewOldDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue136817772315141418702434-32-50-49Grossprofit8341088142285511411497-24-46-50Operatingprofit30539251630041255818-50-75Netprofit269342449272367491-12-68-86EPSRMB024031040024033044-16-72-90Grossmargin610061206140605061006150050ppt020ppt-010pptOperatingmargin223222032228212122032291111ppt-001ppt-063pptNetMargin196419261939192319642017041ppt-038ppt-078pptSourceCompanydataCMBIGMestimatesFigure2Risk-adjustedDCFvaluationDCFValuationinRMBmn2023E2024E2025E2026E2027E2028E2029E2030E2031EEBIT305392516645800984120014521742Taxrate151515151515151515EBIT1-taxrate260333439548680836102012341481DA80808096115135159184211-Changeinworkingcapital-199-203-247-297-353-416-487-565-650-Capex-115-115-115-138-164-194-227-263-302FCFF2695157210277361465590740Terminalvalue8319FCFTerminalvalue26951572102773614655909059Terminalgrowthrate20WACC1108CostofEquity140CostofDebt50EquityBeta110RiskFreeRate300MarketRiskPremium100TargetDebttoAssetratio300EffectiveCorporateTaxRate150PVofenterprisevalueRMBmn7939NetdebtRMBmn596MinorityinterestsRMBmn0EquityvalueRMBmn8535EquityvalueHKmn9484ofsharesoutstandingmn1121PricepershareHK846SourceCMBIGMestimatesFigure3SensitivityanalysisWACC846100810581108115812083011141017932859794251050963887819760Terminalgrowthrate209959158467847301594687380975370210902836777724677Figure4CMBIGMestimatesvsconsensusCMBIGMConsensusDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue136817772315141318202256-32-2326GrossProfit8341088142283810821198-0505187OperatingProfit30539251629340660041-36-140Netprofit26934244926536054214-49-172EPSRMB02403104002403204907-52-183GrossMargin610061206140593259465310168ppt174ppt830pptOperatingMargin223222032228207622322660155ppt-029ppt-431pptNetMargin196419261939187519772402088ppt-051ppt-463pptSourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE224Aug2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnRevenue10357611052136817772315Costofgoodssold321262416533690894Grossprofit71549963683410881422Operatingexpenses346400416529696906Sellingexpense154187180239320417Adminexpense83105118157204266RDexpense105113111144183234Others467111111Operatingprofit36999220305392516Netfinancialincome8920111112Pre-taxprofit377109240316403528Incometax631636476079Netprofit31493205269342449Minorityinterest000000Attributablenetprofit31493205269342449BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnCurrentassets190319342065223825072871Cashequivalents713476626594613668Accountreceivables451388467562682825Inventories361423402512642808Othercurrentassets378648570570570570Non-currentassets624671709744778813PPE364382436482529576Deferredincometax517675757575Intangibles768085736149Goodwill133132113113113113Othernon-currentassets000000Currentliabilities418489436442489551Short-termborrowings000000Accountpayables14693155161208269Taxpayable425223232323Othercurrentliabilities230345258258258258Non-currentliabilities668494949494Deferredincome121213131313Othernon-currentliabilities547281818181Totalliabilities484574531536583645Sharecapital999999Otherreserves203320222234243626923029Minorityinterest000000Totalshareholdersequity204320322244244527023039Totalequityandliabilities494583540546593654PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE324Aug2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecRMBmnOperatingProfitbeforetaxation377109240316403528Depreciationamortization587379808080Taxpaid452957476079Changeinworkingcapital1863140199203247Others1722111112Netcashfromoperations205177243140208270InvestingCapitalexpenditure35176122115115115Netproceedsfromdisposalofshort-term54810391921000investmentsOthers5428181960111112Netcashfrominvesting35629782104104103FinancingDividendpaid7537246786112Netborrowings200000Proceedsfromshareissues70100000Others136413000Netcashfromfinancing612101376786112NetchangeincashCashatthebeginningoftheyear277713476626594613Exchangedifference241626000Cashattheendoftheyear713476626594613668GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue117265382300299303Grossprofit111301275311303307Operatingprofit1697301212388282318Netprofit1767051211312274312PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin690656605610612614Operatingmargin356131209223220223ReturnonequityROE1544691110127148GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecNetdebttoequityx040303020202Currentratiox464047515152Receivableturnoverdays127320101483150014001300Inventoryturnoverdays335654543624350034003300Payableturnoverdays127816601089110011001100VALUATION2020A2021A2022A2023E2024E2025EYE31DecPE170581262202158121Divyield070411121621EVnananana5136950819EVSalesnananana2922SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE424Aug2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE5