ANDON HEALTH(002432) 华创证券·2024-11-16 02:31Investment Rating - The report gives a "Recommend" rating for Jiuan Medical (002432) with a target price of 62 CNY [1] Core Views - Jiuan Medical is a leading domestic medical device company with deep localization in the US market, leveraging its iHealth brand to expand its product portfolio in the high-paying US market [1][6] - The company has a strong cash position and financial assets, with 22.9 billion CNY in cash and financial assets as of Q3 2024, providing stability for R&D and shareholder returns [1][6] - The iHealth brand has established a solid foundation in the US market, with a well-developed commercialization process and strong channel resources, particularly through e-commerce platforms like Amazon [1][6] - The company's future growth is expected to be driven by new products such as the triple test for respiratory diseases and continuous glucose monitoring (CGM) devices, which have significant market potential in the US [1][7] Current Strengths - Jiuan Medical has a robust cash position, with 22.9 billion CNY in cash and financial assets as of Q3 2024, which is nearly equal to its market capitalization at the time [1][6] - The iHealth brand has a strong presence in the US market, with a well-established commercialization process, including clinical, regulatory, production, and logistics capabilities [1][6] - During the COVID-19 pandemic, iHealth's antigen test kits gained significant market share in the US due to their availability, fast delivery, and ease of use, further solidifying the brand's position [1][6] Future Growth Opportunities - The triple test for COVID-19, influenza A, and influenza B is expected to become a new "blockbuster" product in the US market, with a potential market size of 680 million USD [1][7] - The CGM device, currently in development, is expected to synergize with the company's diabetes care "O+O" model, offering significant growth potential in both the US and Chinese markets [1][7] - The company's diabetes care "O+O" model is rapidly expanding, with over 260,000 patients under care in China and 17,000 in the US, supported by employee stock ownership plans [7][50] Financial Projections - The report forecasts Jiuan Medical's net profit attributable to shareholders to be 1.7 billion CNY in 2024, 1.8 billion CNY in 2025, and 2.0 billion CNY in 2026, with year-on-year growth rates of 35.6%, 6.0%, and 11.4% respectively [1][8] - The company's iHealth product line is expected to see revenue growth of -16%, 6%, and 5% in 2024, 2025, and 2026, respectively, with gross margins improving due to the higher-margin triple test [56] - The diabetes care "O+O" business is projected to grow by 100%, 33%, and 50% in revenue from 2024 to 2026 [56] Valuation - The report uses a sum-of-the-parts valuation method, assigning a 13X PE multiple to the medical business, resulting in a valuation of 11.4 billion CNY, and a valuation of 19.1 billion CNY for the asset management and investment business, leading to a total target market capitalization of 30.5 billion CNY by 2025 [1][8] - The target price of 62 CNY implies a 39% upside from the closing price of 44.5 CNY on November 15, 2024 [1][8]