The journey of the medical equipment industry to go abroad has always been a magnificent chapter that inspires infinite longing and exploration. However, to sail the global technology wave and win the trust and recognition of the international medical community, especially overseas physicians, is a difficult test of wisdom and strength.

In the high-precision field of cardiovascular intervention therapy, Yijuye Medical has become a breakthrough winner with its extraordinary vision and strength. Based on the international market, its high-quality products have now been sold to more than 70 countries and regions around the world, and the contribution rate of overseas markets is even higher than 85%, making it a leader in the field of interventional therapy for global cardiovascular disease.

Recently, Yijuye Medical released its performance report for the first half of 2024. Despite the external challenges of geopolitical turmoil and volatile foreign exchange markets, Yijuye Medical's global layout has not stopped. After acquiring a series of overseas assets and other major milestones, where will the company look next?

Efficient operation, strong performance in the Asia-Pacific region

First of all, from the financial data, Yijuye Medical has shown the stability and resilience of its financial foundation in the face of complex external environments such as geopolitical turmoil and volatile foreign exchange markets. The company's operating income and profitability have continued to maintain a stable track, not only highlighting its deep roots in the field of innovative medical equipment, but also indicating a strong potential for future growth.

According to the latest financial report, in the first half of 2024, Yijuye Medical achieved a total revenue of US$78.91 million, achieving a steady growth of 0.6% year-on-year after excluding exchange rate fluctuations, and its own product sales volume reached 0.717 million.

Among them, the Asia-Pacific region, with its strong endogenous growth momentum, has achieved strong performance, and the strategic acquisition of Korean and Indonesian distributors SJ Medicare and PT Revass at the end of 2023 has contributed an additional income of US$4.3 million to this region, making the total revenue of the Asia-Pacific region soar to US$24.0 million, with a year-on-year growth rate of up to 31%, becoming an important engine for the company's performance growth.

In terms of profitability, Yijuye Medical's profitability performance has continued to be strong. In the first half of 2024, the company's gross profit reached US$55.776 million, and the gross profit margin maintained a high level of 70.7%, reflecting the company's continuous optimization and iteration ability of its product line. At the same time, the company's profit attributable to owners reached US$18.828 million, although down 25% year-on-year, mainly due to additional expenses incurred in integrating new acquisitions at the end of 2023, which would be beneficial in the long run to accelerate the company's development. The net profit margin remained at a healthy level of 23.9%. Basic earnings per share were 2.28 US cents. The performance announcement also previews the maintenance of a stable dividend policy, which not only creates substantial value returns for shareholders, but also demonstrates the company's confidence in its future prospects.

In terms of cash flow management, Yijuye Medical has also demonstrated a high degree of foresight and stability. As of June 30, 2024, the company's cash and bank balances reached US$0.247 billion, building a solid financial safety net. This ample cash reserve not only provides solid financial support for the company's current and future R&D and innovation activities, but also lays a solid foundation for the commercialization process of its products, ensuring that the company can continue to lead and achieve long-term development in the fierce market competition.

Ready to go, the future is promising

In this performance report released by Yijuye Medical, it not only demonstrates its stable financial performance in detail, but also reveals its grand blueprint in the fields of R&D, production and sales, showing strong growth potential and a promising trend overall.

In terms of R&D, as an innovative medical equipment enterprise, Yijuye Medical has accumulated more than 20 years of R&D experience and successfully transformed its innovative concepts into a rich product pipeline, which comprehensively covers all surgical treatments for PCI and PTA. As of the date of the announcement, the company has more than 50 approved products, including 27 PMDA-approved products, 32 CE-marked products (including Sapphire ULTRA and Sapphire NC ULTRA), 16 FDA-approved or cleared products, and 21 products approved by the National Medical Products Administration.

It is worth mentioning that since the company acquired German company eucatech AG in November last year, it has quickly integrated resources. This strategic move is expected to become a key engine to drive future performance growth. In the first half of this year, the company has efficiently promoted the global registration process of eucaLimus, Support C, Resistant, and VITUS, four of eucatech AG's star products. Among them, eucaLimus has already obtained registration approval in the direct sales market in Malaysia. Registration applications for other products have also been submitted to regulatory agencies in many places such as Hong Kong, Malaysia, Switzerland, Italy, and Saudi Arabia, and are waiting for good news. According to the company's strategic layout, it is expected that eucatech AG will resume production and start shipping in the third quarter of this year, injecting new vitality and momentum into the sustained growth of the medium- to long-term performance of the Yiju Medical.

In terms of production, the company has accelerated capacity construction, which is expected to provide a solid foundation for subsequent sustained commercialization. Currently, the company has an annual output capacity of about 2 million balloons and 0.06 million stents in Shenzhen, China and Eindhoven, Netherlands. In order to plan for future capacity needs, Yiju Medical has decided to build the group's largest R&D and production base in Fuyang, Hangzhou. It is expected that when it is put into production in 2027, it will increase the annual production capacity by an additional approximately 2.4 million units.

In the commercialization process, Yiju Medical is carefully laying out with a forward-looking global vision, and this strategic move has become the core driving force for its effective resistance to the challenges of external environmental changes. The company is actively implementing differentiated market penetration strategies to accelerate product penetration and expansion in major markets around the world.

Among them, for the domestic market, how to actively respond to the volume-based procurement under the influence of the medical reform, has become an important issue for medical device companies. According to the company's disclosure, Scoreflex balloon catheter successfully won the bid at the highest price for the centralized volume-based procurement in the "3+N" alliance in Beijing-Tianjin-Hebei. The relevant centralized volume-based procurement project has been implemented in three provinces of Hebei, Guangxi, and Jiangxi since May 2024, and will gradually be promoted to other provinces in the second half of the year. It is expected that the hospital access and sales of related products will increase in the second half of the year.

For the US market, with Abbott Laboratories adjusting its sales strategy to respond to changes in insurance policies, the sales of Scoreflex NC and JADE are expected to pick up in the second half of the year. In the medium- to long-term, when Abbott Laboratories completes the integration of CSI's business, it is expected to introduce the group's products to more hospitals.

Summary

With the gradual stabilization of domestic policies and the introduction and implementation of policies to support innovation and R&D, the medical and health sector has entered the value investment range after three years of systematic adjustment, and there are many opportunities for high-quality individual stocks.

As a global medical device manufacturer, Yiju Medical has a clear logic of value growth and is quite attractive.

In the long run, with the aging of the population and the continued penetration of minimally invasive procedures, the high-value interventional device product market is expected to maintain high and prosperous growth globally (Data source: China International Capital Corporation's forecast). In the medium term, Yiju Medical's revenue system is diversified, overseas channels are mature, and policy disruptions in a single market are small, which can effectively resist risks and cross the industry cycle. In the short term, the company's efficient integration of acquired assets is about to be put into production and is waiting to be launched in the future. New product launches will also provide sufficient momentum for subsequent performance. In the future, with the continued rotation of the flywheel, Yiju Medical's intrinsic value is expected to be further revealed and worth looking forward to.