China Zhongji Investment 2022 IPO Project Progress Series (II): United Imaging Medical

China Zhongji Investment is a comprehensive investment platform jointly invested and established by well-known private enterprises in Hebei Province, under the support of the CPC Hebei Provincial Committee and the Provincial Government, and under the guidance of the Hebei Provincial Federation of Industry and Commerce. It is managed and operated by seasoned investors and industry experts.

Since its establishment in 2016, driven by its commitment to integrity, China Zhongji Investment has consistently sought long-term certainty amidst short-term uncertainties. Guided by a technology-driven philosophy, the company actively focuses on the future and implements its strategies through flexible yet stringent systems. For six years, the company has maintained continuous profitability and progressed alongside its partners.

Since 2022, three projects of China Zhongji Investment have already passed the review process, and several more are undergoing the same process. Starting today, we will be gradually introducing these high-quality projects to help more people understand what China Zhongji Investment is doing, with the hope of creating a shared future.

On August 10 (today), United Imaging Intelligence (Shanghai) Co., Ltd. (hereinafter referred to as "United Imaging") commenced its online subscription, and is about to be listed on the STAR Market...

Today, let's learn more about United Imaging.

       A Huge Market Track, Accelerated Import Substitution

Driven by an aging population and increasing medical needs, the Chinese medical imaging equipment market continues to grow. According to consulting firm data, the market size reached 53.7 billion yuan in 2020 and is expected to reach nearly 110 billion yuan in 2030, with a compound annual growth rate of 7.3%, twice the global growth rate.

In terms of competitive landscape, medical imaging equipment is the segment with the highest technical barriers in the medical device industry. Currently, China's medical imaging equipment market is characterized by low industry concentration, small enterprise scale, and low market share of domestic products in the high-end market. With the progress in the overall R&D level of domestic medical equipment, core technologies are being gradually mastered. Some domestic enterprises, represented by United Imaging, have achieved technological breakthroughs through innovation. The monopolistic pattern dominated by imported enterprises such as GE, Philips, and Siemens (GPS) is changing, and the domestic medical imaging equipment industry is gradually achieving the goal of keeping pace with international brands.

       Emphasis on Both R&D and Sales: A High-Profile Approach

United Imaging's core products are mostly the first of their kind in China, and their application scenarios are constantly expanding. The company's MR, CT, PET/CT, PET/MR, and DR products are all among the top in the industry and have been widely recognized by end customers. They currently cover nearly 900 top-three hospitals nationwide, with 49 of the top 50 top-three hospitals being clients of the company. There are few domestic competitors, with the main foreign competitors being GPS.

In the field of magnetic resonance imaging equipment, the company's low-end equipment has a dominant market share, and its high-end equipment ranks among the top three. In the X-ray imaging field, the company's market share in mobile DR and mammography machines is among the top in China; in the molecular imaging system field, the company's PET/CT products have ranked first in the Chinese market for four consecutive years since their launch; in addition, in 2021, United Imaging became the largest CT equipment manufacturer in the Chinese market (mainly low-end); and in the low-energy radiotherapy equipment market, the company's products also rank among the top in market share.

From a financial perspective, on the revenue side: From 2018 to 2021, the company's revenue increased from 2.035 billion yuan to 7.254 billion yuan, with a compound annual growth rate of 52.76%, mainly due to the strong competitiveness of the company's products; on the profit side: In 2021, the company's gross profit margin reached a historical high of 49.42%, and net profit attributable to the parent company turned from a loss of 126 million yuan to a profit of 1.417 billion yuan, with a significant improvement in profitability, mainly due to continuous product upgrades and the company's relatively strong pricing power; on the expense side: From 2018 to 2021, the company's R&D and sales expense ratios remained above 10%, with a cumulative sales investment of 2.952 billion yuan. It has now established a highly efficient sales network and distribution system. By cooperating with high-quality distributors, utilizing the distributors' decentralized regional promotion and rapid response speed, the breadth and depth of the coverage area of the company's products have been improved; on the R&D side: Cumulative R&D investment of 3.255 billion yuan.

       Attracting Professional Talent with Global Vision and Deep Industry and Technical Expertise

The company's senior management team has extensive experience in various industries. As of June 30, 2021, the company had nearly 2,000 R&D personnel, accounting for more than 35% of the total number of employees; more than 1,700 people have master's or doctoral degrees, and more than 350 people have overseas education backgrounds or work experience. In terms of patents, the company has been granted more than 1,500 invention patents, including more than 1,100 domestic invention patents and more than 380 overseas invention patents.

The founder of the company, Xue Min, was the former general manager of Siemens Magnetic Resonance Company. In December 2020, Dr. Zhang Qiang, the co-founder, took over from Dr. Xue Min as chairman of the company. After graduating with a doctorate from Case Western Reserve University in the United States, he has been engaged in magnetic resonance technology innovation, product R&D, industrialization, and related management work for a long time. He was the general manager of Siemens Medical China's magnetic resonance business unit. The senior management team has a deep understanding of the industry.

       In 2019, United Imaging Healthcare was undergoing a round of secondary share transfer transactions. Upon learning of this, the project team immediately launched an investigation, subsequently holding an internal company meeting, and decisively decided to participate. As a company covering the full range of high-end medical imaging equipment, United Imaging Healthcare, through sustained, high-intensity R&D investment and by continuously conquering the challenges of high-end medical imaging technology, has successfully broken the decades-long monopoly held by foreign companies such as GPS on the Chinese market. The project team believes that United Imaging Healthcare will leverage its technological advantages to continuously increase its domestic import substitution market share, actively explore foreign markets, and further extend its global strategic layout. We expect that after United Imaging Healthcare's listing on the STAR Market, it will continue to overcome technical challenges in medical imaging equipment, develop critical core components and innovative products, and become a globally leading, continuously innovative medical equipment R&D company.