In recent years, with the continuous growth of juvenile myopia in China, ophthalmic medical treatment has been heating up. The Autek China Inc(300595) (300595), whose main business involves corneal shaping lens and its care products, is at this track. Corneal shaping lens, also known as OK lens, is a customized product that temporarily reduces the degree of myopia by temporarily changing the corneal morphology. It is used for vision correction and myopia control.
After five years of listing, Autek China Inc(300595) has had a good performance in the secondary market. According to the previous resumption price, its share price once increased by more than 54 times, and its market value is close to 100 billion yuan. Even in 2018, when the market was gloomy, its share price recorded an increase of 38.07%. However, the share price of Autek China Inc(300595) has been falling since the end of June 2021 – the maximum pullback rate of 109.7 yuan / share has reached 55.14%, almost recovering all the gains in the first half of 2021. Since 2022, the company’s share price has fallen by 13.89%. As of the closing on January 14, it closed at 49.4 yuan / share, a new low in the range.
In the secondary market dominated by speculation expectations, why was Autek China Inc(300595) holding the trump card of OK mirror quickly “abandoned” by capital?
OK mirror or not a good business?
Autek China Inc(300595) although it has been involved in the corneal shaping lens business for a long time, from the perspective of industry scale, the market penetration of corneal shaping lens in China is less than 2%. At the same time, corneal shaping lens manufacturers are also concentrated, and foreign brands occupy a large market share.
According to the semi annual report data of 2021, Autek China Inc(300595) is the absolute leader in the field of domestic corneal shaping lenses. The sales of its “dream David” products in the first half of the year was 325 million yuan, a year-on-year increase of 82.59%. It is worth mentioning that the revenue of the product accounts for 56.95% of the company’s total revenue in the current period. From the perspective of product segmentation, the revenue of rigid corneal contact lens reached 92.76% in 2020.
From the perspective of focusing on the main business, this is understandable, but investors in the market are worried about whether Autek China Inc(300595) in the medical track has the possibility of main products or centralized purchase. In this regard, Autek China Inc(300595) said on the investor interaction platform: “corneal shaping lens is not within the scope of medical insurance and is not a centralized product.”
As Autek China Inc(300595) said, the probability of centralized collection of corneal plastic lenses as a self funded project is not high. However, the market is worried that the corneal shaping lens may achieve the effect of centralized collection with the help of policy detour, just like the implanted teeth. Previously, in September 2021, the National Medical Insurance Bureau issued a document to support local governments to include implants in the platform hanging network. The disguised “centralized mining” initiative surprised the market – dental implants were originally a “centralized mining haven”, but this situation has now been broken. In this context, it is obviously difficult for the corneal shaping lens, which is also a self funded project, to calmly “stay out of the matter”.
In addition, the customer base of corneal plastic lens is mainly teenagers. With the implementation of “double reduction”, the growth rate of juvenile myopia may slow down in the environment of more emphasis on comprehensive quality. Wang Ningli, Dean of the school of Ophthalmology of Capital Medical University, once said in an interview: “the emphasis on reducing close eye use time and increasing outdoor activity time in myopia protection coincides with the \’double reduction\’ policy. Through the \’double reduction\’ policy, it is expected to improve the current situation of \’high incidence and low age\’ of myopia in Chinese children and adolescents.”
At the same time, the decline in the number of newborns directly reduces the number of future target customers of corneal plastic lenses. According to the data of the National Bureau of statistics, the number of newborns in China has decreased from more than 17 million in 2017 to about 12 million in 2020. Experts predict that this figure will continue to decline in 2021.
Investors in the market will inevitably have doubts about whether the future growth logic of the cornea shaping mirror track is still there, due to the reduced target customers and the or slowing growth rate of myopia.
diversified strategy has not been broken yet
From the financial data, corneal shaping lens is still a revenue pillar worth Autek China Inc(300595) relying on. In terms of gross profit margin, although the data of “dream David” decreased from the highest 92.27% to 89.02% in the half year report of 2021, it still far exceeded Autek China Inc(300595) other businesses and maintained a high profit level.
But even so, the Autek China Inc(300595) multi-element breaking arrow has been put on the bow.
On December 15, 2021, mule medical, a new third board company, issued a directional stock issuance prospectus, which said that the company planned to raise no more than 40 million yuan, and the only issue object determined was Autek China Inc(300595) . Statistics show that mule medical is a “specialized and new” small and medium-sized enterprise in Zhejiang Province. Its main products include ophthalmic medical device hardware and ophthalmic medical device software.
On November 22, Autek China Inc(300595) also issued a foreign investment announcement, saying that its wholly-owned subsidiary Autek China Inc(300595) Investment Co., Ltd. (hereinafter referred to as “OPP investment”) plans to invest in Panjin Runshi ophthalmic hospital Co., Ltd. (hereinafter referred to as “Panjin Runshi”) with its own capital of 46.2903 million yuan through equity transfer and capital increase and share expansion. After the completion of this investment, OPP investment will hold 51% equity of Panjin Runshi. Panjin Runshi, located in Panjin City, Liaoning Province, is mainly engaged in ophthalmic diagnosis and treatment and surgery, optometry products and services.
It is worth mentioning that the above two investments point to the ophthalmic medical business, and Autek China Inc(300595) is willing to expand its territory. However, according to the financial report, Autek China Inc(300595) the revenue of the business accounts for only about 7%.
The situation of single revenue has not been broken, which has not affected the determination of Autek China Inc(300595) diversified progress. According to the incomplete sorting of Autek China Inc(300595) announcement, since February 2018, Autek China Inc(300595) has issued 37 announcements involving “foreign investment”. At the same time, by the end of June 2021, Autek China Inc(300595) has 250 subsidiaries included in the consolidated statements, which also puts forward higher requirements for its internal management.
“high level” technicians in doubt
The diversified strategy has yet to be broken, and the main business of Autek China Inc(300595) wants to work together.
As a medical device, corneal shaping lens needs to be worn for a long time, and the lens needs to be replaced every two years or so, and the user’s brand loyalty is high. Therefore, seizing the brand building is very important for the contestants on this track. Autek China Inc(300595) nature knows this well.
In July 2021, Autek China Inc(300595) announced that the company plans to raise more than 2 billion yuan for the construction of community-based optometry service terminal project and the capacity expansion of corneal shaping lens and its nursing products.
In the announcement, Autek China Inc(300595) emphasized its excellent talent reserve with the words “the company has a technical R & D, technical training and sales team with complete professional configuration, reasonable age structure, rich work experience and strong sense of innovation”.
As mentioned in Autek China Inc(300595) , this talent team covering optics, machinery, electronics, computer, chemistry / chemical industry, medicine, pharmacy, business administration and other professional disciplines will provide strong support for the company’s implementation of the project.
At first glance, this fixed increase does paint a beautiful blueprint. But can the facts really do?
According to the 2020 annual report, Autek China Inc(300595) has 1926 employees, including 1242 technicians. However, in terms of education level distribution, there are 39 people with master’s degree or above, 403 people with bachelor’s degree, and the rest are below bachelor’s degree. Even if all 442 employees with bachelor degree or above are regarded as employees engaged in technical positions, the remaining 800 employees in technical positions have not obtained bachelor degree or above. This seems to be quite different from the expression of “excellent talent reserve” in Autek China Inc(300595) .
There is a great demand for professional and technical personnel in the corneal shaping lens industry, Autek China Inc(300595) once explained in the investor survey minutes that the product penetration is relatively low: “corneal shaping lens is not an ordinary product, it needs to be equipped with professionals, and has high technical requirements for lenses, deployment services and so on.” However, only from the point of view of the education level of technicians, the company’s “professional” reserve seems to be insufficient.
competitors press
Despite the failure of diversification and doubts about the reserve of professionals, Autek China Inc(300595) is operating step by step or is also related to repeated pressure from peers.
The data show that the domestic corneal shaping lens company Eyebright Medical Technology(Beijing) Co.Ltd(688050) has developed rapidly in recent years. In 2019, Eyebright Medical Technology(Beijing) Co.Ltd(688050) corneal shaping lens sold 23200 pieces. By 2020, the number of pieces sold exceeded 100000, a year-on-year increase of 339.68%. In 2021, the volume is more rapid, and the number of films sold in the first half of the year has exceeded 100000. Look at Autek China Inc(300595) , it sold 468200 corneal shaping lenses in 2020, with a year-on-year increase of only 14.52%. According to this growth rate, Eyebright Medical Technology(Beijing) Co.Ltd(688050) is very likely to realize curve overtaking in the field of corneal shaping lens.
Old rivals frequently put pressure, and new rivals are also rubbing their hands. In December 2, 2021, Shanghai Haohai Biological Technology Co.Ltd(688366) announced that it would get 51% stake in Nan Peng optical market at a price of 70 million yuan, and the latter would enjoy the exclusive distribution of the right products in the Chinese mainland with the rigid corneal contact lens and rigid contact lens. As early as March, Shanghai Haohai Biological Technology Co.Ltd(688366) acquired the exclusive distribution rights of the various products of the cornea shaped lens in Chinese mainland through equity acquisition.
With the entry of more and more competitors, the price war of corneal shaping lens is difficult to avoid, which is by no means a good thing for Autek China Inc(300595) whose main business is too concentrated. This newspaper will continue to pay attention to whether the corneal shaping lens will be “collected” in disguise in the future and when the Autek China Inc(300595) diversified strategy will be broken.
