LEPU ScienTech Medical Technology (2291) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 31.6% YoY to RMB325.9m; net profit attributable to owners was RMB151.5m versus a RMB19.8m loss in FY2022, and adjusted net profit increased 55.4% to RMB172.6m.

• Operating cash flow rose 150.7% YoY to RMB164.3m; year-end assets were RMB1,986.5m and net assets RMB1,926.7m.

• Growth was led by congenital heart disease occluders and rapid commercialization of biodegradable PFO occluders; the portfolio included 22 marketed products, 9 in registration stages and 24 R&D candidates.

Financial highlights

• Revenue increased 31.6% to RMB325.9m; gross profit rose 31.5% to RMB288.8m, with gross margin broadly stable at 88.6% versus 88.7%.

• Operating profit was RMB158.7m versus an operating loss in FY2022; profit before tax was RMB173.3m versus a RMB15.0m loss, and net profit was RMB151.5m versus a RMB19.8m loss.

• R&D expenses increased 14.3% to RMB61.6m; distribution expenses rose 29.6% to RMB50.1m, while G&A expenses fell 20.2% to RMB42.8m, mainly on lower listing expenses.

• Net other income was RMB18.4m versus net other losses of RMB69.5m in FY2022; net finance income was RMB14.6m versus net finance costs of RMB13.3m.

• Basic and diluted EPS was RMB0.44 versus a loss of RMB0.06; income tax expense increased to RMB21.8m from RMB4.8m as taxable profit rose.

Outlook and guidance

• MemoSorb biodegradable ASD occluder approval and commercialization were expected in Q2 2024; ScienCrown TAVR marketing approval was expected in Q4 2024, subject to NMPA review.

• Atrial septal radiofrequency puncture approval was expected in H1 2024; transapical mitral valve clip registration filing was planned for H1 2024.

• Aortic valve catheter accessory approval was expected in H2 2024; super stiff guidewire approval was expected by year-end 2024, following a planned Q2 registration submission.

• Clinical trials for the aortic regurgitation valve candidate were planned for 2025; strategy prioritizes biodegradable technology, product development, domestic market expansion and overseas channels.