1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
MHUA
Event Date
2022-02-16
Sector
Health Care
Subsector
Health Care Equipment & Supplies
Offer Range
$10.00
Shares Offered
3.6M
25M
$250.0M
14.4%
Implied Upside vs Midpoint
Description
Our mission is to become a world-leading manufacturer of medical consumables with high quality. We are driven by our commitment, integrity and innovation to empower and serve those who serve others. We are a provider of Class I, II and III disposable medical devices with operating subsidiaries in China. In China, Class I disposable medical devices are those devices with low level of risks and whose safety and effectiveness can be ensured through routine administration. Class II medical devices are those devices with moderate risks that must be strictly controlled and regulated to ensure their safety and effectiveness. Class III medical devices are those devices with relatively high risks that must be strictly controlled and regulated through special measures to ensure their safety and effectiveness. We have Class I, II and III disposable medical devices qualifications, including filing certificates for Class I products and registration certificates for Class II & III products, and disposable medical device production and operation licenses in China. Class I, II, and III medical devices are defined by the National Medical Products Administration of China according to their risk levels under the Regulation on the Supervision and Administration of Medical Devices (2021 Revision), Article 6 of which sets out as follows: . “Medical Devices of Class I” means the medical devices with low risks, whose safety and effectiveness can be ensured through routine administration. . “Medical Devices of Class II” means the medical devices with moderate risks, which shall be strictly controlled and administered to ensure their safety and effectiveness. . “Medical Devices of Class III” means the medical devices with relatively high risks, which shall be strictly controlled and administered through special measures to ensure their safety and effectiveness. The medical products administration of the State Council is responsible for developing the classification rules for medical devices and maintaining catalogues of classified devices. Based on information on the production, distribution and use of medical devices, the State Council analyzes and evaluates the risk levels of medical devices and adjusts the classification rules and classification catalogues. In the US, medical devices are regulated by the Food & Drug Administration’s (FDA) Center for Devices & Radiological Health. Medical devices are classified as either Class I, Class II, or Class III by the FDA. The FDA’s classification is similarly based primarily on risk the medical device poses. Under the FDA’s classification system, Class I medical devices are generally deemed low risk and Class III medical devices are seen as the highest risk. The types of controls required are dependent on the product’s classification. Classification by the FDA is directly related to (i) intended use and (ii) indications of use. Intended use is the general purpose of the medical device or its function. Indications of use describe the disease or condition the medical device will diagnose, treat, prevent, cure, or mitigate, including a description of the target patient population. Once intended use and indications for use is defined, the next step in determining classification is to find the applicable regulations and product codes. The FDA has established several general categories based on the medical specialty at: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?CFRPartFrom=862&CFRPartTo=892. Although the precise definitions of Class I, II and III as used in the China and the U.S. are not necessarily identical, our management, based on their review and understanding of the definitions published on the official websites of both the Food and Medical Products Administration of China and the U.S. FDA, believes that both agencies have adopted generally similar definitions and categories relating to Class I, II, and III medical devices. “Class I” medical devices in China refers to sanitary and civilian products with extremely low risk, which do not need to be disinfected. To record this type of product in the official catalogue, a recordation application must be submitted on the website of the National Medical Products Administration. The application must clarify relevant information about product standard, the scope of use, production technologies, and instructions for the use of material. The device may then be produced and distributed after obtaining the online approval of the National Medical Products Administration. For example, the “disposable civilianmasks” used in the epidemic, which do not need to be disinfected, can be produced and distributed upon filing the recordation application and obtaining approval from the website of the National Medical Products Administration. This mask is similar to the civilian grade masks in the U.S., which likewise can be directly applied for recordation on the FDA’s website and can be produced and distributed upon obtaining approval from the FDA. “Class II” and “Class III” medical devices in China refer to medical-grade products with higher risk. The application procedures for recordation of these two types of products in China are as follows: First, the products are submitted to [entity name] for inspection with various materials of such products. After the submitted materials are reviewed by the experts to their satisfaction, the National Medical Products Administration will organize a team of experts to visit the factory for on-site inspection and acceptance. After passing the on-site acceptance, the products with higher risk are required to be clinically tested. Only after the clinical report and other application documents are submitted to the National Medical Products Administration, which approves these materials and issues the product registration certificate, shall the enterprise be allowed to produce and distribute the product. Our management believes that this process is similar to the 510K clearance procedures of the FDA in the U.S. Section 510(k) of the Food, Drug and Cosmetic Act requires device manufacturers who must register, to notify FDA of their intent to market a medical device at least 90 days in advance. This is known as Premarket Notification - also called PMN or 510(k). This allows FDA to determine whether the device is equivalent to a device already placed into one of the three classification categories. Thus, "new" devices (not in commercial distribution prior to May 28, 1976) that have not been classified can be properly identified. Specifically, medical device manufacturers are required to submit a premarket notification if they intend to introduce a device into commercial distribution for the first time or reintroduce a device that will be significantly changed or modified to the extent that its safety or effectiveness could be affected. Such change or modification could relate to the design, material, chemical composition, energy source, manufacturing process, or intended use. For example, in China, the “disposable medical masks” used in the epidemic must be disinfected, and only factories with “registration certificate and production license” for this product are allowed to produce and distribute it. This is similar to the process for “disposable medical masks” in the U.S., which must be disinfected, and which can only be produced and distributed by factories with “510K” approval from the FDA. We serve hospitals, pharmacies, medical institutions and medical equipment companies for over 30 years with more than 800 products for domestic sales and 120 products for exports. We sell our products both domestically and internationally. Besides significant domestic sales in China, our export sales are extended to more than 30 countries in continents including Europe, North America, South America, Asia, Africa, and Oceania. Meanwhile, we have established a sound quality assurance system. We have received international “CE” certification and ISO 13485 system certification. We have also registered with the FDA (registration number: 3006554788), for over 20 products as of the date hereof, including but not limited to, ID bracelet, surgical tapes, and elastic, adhesive bandages, which are all FDA Class I products. Currently, 2 out of our top 20 products – medical dressing and masks – are registered with FDA. FDA registration must be renewed every three years. Our most recent registration renewal was in February of 2021 and will be valid through 2023. We operate our business through three operating subsidiaries in PRC: Yangzhou Huada mainly manufactures and sells Class I disposable medical devices under our own brands, and distributes Class I and Class II disposable medical devices sourced from other manufacturers, to our domestic customers. Specifically, Yangzhou Huada focuses on the manufacturing, sales and distributions of non-bottled products, such as brushes, and ID bracelets for domestic sales. Jiangsu Yada mainly manufactures and sells Class I and Class II disposable medical devices under our own brands, and distributes Class I and Class II disposable medical devices sourced from other manufacturers. Specifically, Jiangsu Yada focuses on distributors who conduct overseas sales. Jiangsu Huadong mainly manufactures and sells Class I, II and III disposable medical devices under our own brands, and distributes Class I, II and III disposable medical devices sourced from other manufacturers, to our domestic and overseas customers. Specifically, Jiangsu Huadong focuses on the manufacturing, sales and distributions of polyethylene bottled products, such as eye drop bottles and tablet bottles. Our operating subsidiaries are located in Touqiao Town, Yangzhou City, Jiangsu Province, PRC, which are surrounded by hundreds of disposable medical device manufacturers. Due to the advantage of our location and our wide-ranging product portfolio, no matter what disposable medical devices our clients need, we can supply them with products either manufactured by us or outsourced from others but passed through our quality control scrutiny. Because clients can find all the products from us instead of dealing with multiple suppliers, we become their One-stop shop for variety of disposable medical devices. --- Our principal executive offices are located at 88 Tongda Road, Touqiao Town, Guangling District, Yangzhou, PRC. Our telephone number at this address is +86-0514-89800199. Our registered office in the Cayman Islands is currently located at the office of Sertus Incorporations (Cayman) Limited, Sertus Chambers, Governors Square, Suite #5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is The Crone Law Group P.C., 500 Fifth Ave, Suite 938, New York, NY 10110. Our Websites are www.meihuamed.com and www.ir.meihuamed.com.
Meihua International Medical Technologies Co., Ltd. annual income statement and balance sheet, FY 2022 to FY 2025, as reported in SEC filings.
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue | $103M | $97.1M | $96.9M | $61.8M |
| Gross profit | $38.1M | $33.2M | $33.3M | $19.2M |
| Operating income | $10.8M | $14.7M | $14.3M | $8.3M |
| Net income | $6.2M | $11.6M | $10.8M | $6.8M |
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Total assets | $164M | — | $186M | $207M |
| Total liabilities | $24.9M | — | — | — |
| Total equity | $139M | $147M | $159M | $189M |
| Cash & equivalents | $26.7M | $16.9M | $17.3M | $15.2M |