Endovastec Files for an IPO, Winking At the Robust Domestic Market
Shanghai-based medical device developer opened a subscription to 18 million shares and set its IPO price at CNY 46.23 per share. The company stands as the biggest domestic player in China's medical stent field.
Shanghai-based medical device developer opened subscriptions to 18 million shares and set its IPO price at CNY 46.23 per share.
Endovastec, a subsidiary of Shanghai MicroPort Medical (0853.HK), is one of the two medical device developers amongst the first batch of 25 companies that will be traded on the STAR board on July 22.
The very first salient numbers on the company's financial statement are its surging income figures, from CNY 125 million in 2016 to 165 million in 2017, and tapping CNY 231 million in 2018, representing around 24% and 28% year-on-year increase respectively. Notably, aortic stent products accounted for over 95% of the company's revenues.
The company has been in fierce competition with the world largest medical device developer, Medtronic (NYSE: MDT) in the treatment of Abdominal Aortic Aneurysm (AAA). Both companies are providing stent graph systems.
Endovastec obtained 26% of the Chinese endovascular stent market in 2018, ranking the second after Medtronic the behemoth. The company ranked first among domestic companies and followed by its major domestic rival Hong Kong-listed LifeTech Scientific (1302.HK).
The proportion of research and development expenses has been declining year by year, and the stent developer has not explained the details of this decline, raising suspicious questions.
As of December 31, 2018, the company has covered more than 700 hospitals in 30 provinces of China. What's more, the company has disclosed no pending licensing process or problem regarding its products' commercialization. As of March 31, 2019, the company had granted 86 domestic and foreign patents.
The domestic market for AAA treatment is about CNY 1 billion, with a compound growth rate of 17.2%. As population ages and the new medical reforms that shape, the demand gets even consolidated.
Robust market demand reflected in the prospectus, as well. From 2016 to 2018, the company's incomes grew 36%, and the net profit growth rate that returns to the parent company is 48% during the same period.
There is a very limited batch of options for the treatment of AAA, and Endovastec's products have already been recognized as one of the irreplaceable solutions, globally. Unless the company gets into trouble with CFDA or related patent institutions, it may be a relatively safer harbour for the STAR venturers.