Weigao Orthopaedic(SH:688161)2025-08-28 02:12Summary of Shandong Weigao Conference Call Company Overview - Company: Shandong Weigao (1066.HK) - Industry: China Healthcare - Stock Rating: Equal-weight - Price Target: HK$6.40 - Current Price (as of August 27, 2025): HK$6.49 - Market Capitalization: HK$29,350 million - Fiscal Year Ending: December Key Financial Results - 1H25 Sales: Rmb6.64 billion, a slight decrease of 0.1% YoY, and 3% below Morgan Stanley estimates [7] - Recurring Net Profit: Rmb967 million, down 12.7% YoY, and 8% below estimates [7] - Gross Profit Margin: Fell by 1.2 percentage points YoY due to foreign exchange fluctuations and VBP pricing pressure [7] - Operating Cash Flow: Decreased by 14% YoY to Rmb882 million, attributed to FX losses and slower accounts receivable collection [7] - Interim Dividend: HK$9.69 cents per share, with a payout ratio of approximately 44% [7] Segment Performance - General Consumables: Increased by 0.2% YoY, but operating profit margin (OPM) fell by 3.1 percentage points due to FX and VBP impacts [2] - Pharma Packaging: Flat performance; prefilled syringes grew by 3-5%, while auto-injectors surged by 200% from a small base [2] - Ortho Segment: Decreased by 1.6%, but OPM improved by 9 percentage points YoY due to sales model transition [2] - Interventional Consumables: Slipped by 2.0% [2] - Blood Management: Grew by 8.1% [2] - Overseas Sales: Grew faster at 4% YoY, accounting for 24% of group revenue, with US growth at approximately 10% excluding a Rmb20 million tariff impact [2] Growth Outlook - Mid-term CAGR Target: Unchanged at over 10% [3] - 2025 Revenue Growth Expectation: Likely to be in the mid-single to high-single digits percentage range [3] - General Consumables Growth: Expected to be around 10% in 2025, supported by anesthesia ramp-up and manageable VBP impact [3] - Pharma Packaging Growth: Anticipated to deliver over 10% CAGR in the mid-term, driven by pre-filled syringes and auto-injectors [3] - New Product Launches: Expected to benefit other segments, including Cleaner Vac and plasma surgical tools [3] Valuation and Risks - Valuation Methodology: Discounted cash flow with a WACC of 13.0% and a terminal growth rate of 3% [8] - Upside Risks: Better-than-expected core business performance, favorable government policies, and successful product rollouts [10] - Downside Risks: Regulatory headwinds, intense industry competition, and underperformance in orthopedics and interventional devices [10] Additional Insights - Stock Performance: 52-week range was HK$3.96 to HK$7.39 [4] - Earnings Per Share (EPS) Estimates: Expected EPS for 2025 is Rmb0.49, with a gradual increase projected for subsequent years [4] - Return on Equity (ROE): Expected to decline slightly from 9.2% in 2025 to 8.8% in 2027 [4] This summary encapsulates the key points from the conference call regarding Shandong Weigao's financial performance, segment results, growth outlook, valuation, and associated risks.