Pujiang International (2060.HK) Expands into High-End Medical Device Manufacturing, Poised to Benefit from STAR Market Momentum

On the evening of September 1, Pujiang International Group Limited announced that it would acquire a 26% equity stake in Shanghai Push Medical Devices Co., Ltd. for RMB 104 million (hereinafter referred to as “RMB”). Founded in 2012, Shanghai Push Medical Devices Co., Ltd. is primarily engaged in the development of medical device technologies and the production and sales of medical devices, specializing in heart-related diseases. Its products are marketed and sold under the PushMed® trademark. Notably, Shanghai Push Medical Devices Co., Ltd. is preparing to apply for listing on the STAR Market.

Pujiang International Group Limited Enters the High-End Medical Device Manufacturing Market from High-End Bridge Cable Manufacturing: What Kind of Future Will It Create with the Tailwinds of the STAR Market?

01. Acquisition of Equity in Shanghai PushMed to Establish Strategic PresenceHigh-End HealthcareManufacturing

Shanghai PushMed’s product portfolio comprises six devices, including the Left Atrial Appendage Occluder System, Atrial Septal Defect Occluder, Ventricular Septal Defect (“VSD”) Occluder, Patent Ductus Arteriosus Occluder, Interventional Delivery System for Occluders, and the Snare used in VSD occlusion therapy. All products have reached internationally advanced standards.

Among these, the left atrial appendage (LAA) occluder and the atrial septal defect (ASD) repair system have obtained manufacturing and sales licenses. In particular, the LAA occluder system has completed nearly 200 clinical implantations, with a surgical success rate of 98%. Recognized by numerous experts across China, the product demonstrates higher success rates and ease of operation compared to similar imported products. As this technology is recognized as highly innovative, it qualifies for priority review by the National Medical Products Administration (NMPA) during the registration application process. Furthermore, it has been included in the list of approved medical devices under the Shanghai Municipal Government’s Medical Insurance Program.

Figure: Images of Selected Products from Shanghai PushMed

Image Source: Official Website

It can be seen that,Shanghai Push Medical Devices Co., Ltd. specializes in the research, development, and manufacturing of high-end cardiac medical devices, which involve significant technical barriers.This is also reflected in the team, hardware, and patents of Shanghai PushMed.

Regarding the core team, the company boasts engineers with over a decade of experience in congenital heart disease product development, as well as scholars with extensive clinical expertise. In terms of production facilities and manufacturing processes, the company has passed the comprehensive quality system assessment by the British Standards Institution (BSI) and obtained Good Manufacturing Practice (GMP) certification from the China Food and Drug Administration (CFDA). The facilities include an 800-square-meter Class 10,000 cleanroom workshop and a fully equipped biological laboratory. The company has invested tens of millions to import advanced high-elastic yarn braiding systems from OMA (Italy) and stent laser engraving systems from Rohfin (Germany). Its microbiological and physicochemical testing equipment are at the industry’s leading level. Furthermore, Shanghai Push Medical Devices Co., Ltd. has registered and maintains 18 patents.

After years of dedicated research and development, Shanghai Push Medical Devices Co., Ltd. has successfully established its industry influence in the field of implantable devices and systems for heart-related diseases, and has obtained sales approvals from relevant government authorities in the European Union, India, and China. Notably, its congenital heart disease products received EU CE certification in 2013 and have been exported to countries including India, Turkey, and Hungary, accumulating a strong reputation for product quality and customer satisfaction.

02. Core Business Enters Fast-Growth Lane, Dual-Engine Drive Ensures Steady and Long-Term Progress

Pujiang International Group Limited is the largest supplier of bridge cables used in the construction of super-large bridges in China and one of the leading manufacturers of prestressed materials in China.

Pujiang’s development history dates back to 1989. Starting as a bridge cable factory, the company has forged ahead for three decades and has now evolved into a high-tech manufacturing group centered on the bridge cable manufacturing industry chain. It has provided cable structures for more than 800 major bridges worldwide, capturing half of the global market share for cables used in extra-large suspension bridges and extra-large cable-stayed bridges.

Pujiang International Group Limited’s business is primarily divided into two segments: (1) the manufacturing and supply of prestressed materials for various infrastructure construction projects; and (2) the manufacturing and supply of cables used in bridge construction.

According to the interim financial report, Pujiang International Group Limited recorded a revenue of RMB 756 million in the first half of the year, representing a year-on-year increase of 22.5%; its gross profit amounted to RMB 192 million, marking a significant year-on-year surge of 55.5%.Excluding one-time expenses, Pujiang's adjusted net profit surged 77.1% to RMB 94.6 million in the first half of the year.Driven by its impressive financial performance, the share price of Pujiang International Group Limited has been on a steady upward trajectory since its listing.

During the period, the high-margin cable business achieved robust growth, with revenue surging 80% year-on-year to RMB 340 million. Meanwhile, the gross profit margin of the cable business increased significantly by 5.4 percentage points to 36.1%, driving the company’s overall gross profit margin to continue its upward trend.

Figure: Pujiang International Group Limited's Business Revenue and Gross Profit Margin

Source: Interim Financial Report

In addition, the Company secured new cable contracts totaling approximately RMB 683 million during the period. As of the end of the reporting period, the Company had 39 ongoing projects, with an outstanding contract backlog of approximately RMB 1.123 billion. Due to the Spring Festival effect in the first half of the year, the delivery schedules for most mainland China cable projects are concentrated in the second half. Consequently, business development is expected to maintain high-quality growth in the second half of the year.

Looking ahead, with the implementation of the 13th Five-Year Plan and the Belt and Road Initiative, and as domestic infrastructure investment priorities gradually shift towards transportation, logistics, and technological infrastructure, the number of domestic infrastructure projects is expected to accelerate, thereby supporting the company in maintaining steady, high-quality growth.

Data Source: Prospectus

In addition to newly added infrastructure projects, the maintenance and refurbishment of existing bridges will also create significant opportunities for Pujiang International Group Limited. Many large-scale bridges in mainland China are currently over 30 years old; due to inadequate early protective measures and suboptimal bridge management standards, these structures are prone to deterioration. As the replacement cycle for bridge cables approaches, a substantial number of bridges are expected to undergo renovation within the next decade, which is anticipated to provide favorable space for business expansion for Pujiang International Group Limited.

Based on the first-half 2019 “performance report” of Pujiang International Group Limited, its core cable business achieved rapid growth. The increasing technological sophistication has become a distinctive feature of this “performance report.” Against the backdrop of fluctuating domestic and international economic conditions, Pujiang has drawn a smooth and elegant growth curve through its stable business expansion.

From the perspective of the next decade, Pujiang’s core business will have no shortage of orders; however, the market will eventually reach saturation.

Management guru Charles Handy pointed out that any growth curve will slide past the vertex of the parabola (the limit of growth). The secret to sustained growth lies in initiating a new S-shaped curve before the first one declines. During the rapid development phase of its core cable business, Pujiang International Group Limited proactively laid out plans for high-end and cutting-edgeHeartIn the medical device sector, identifying a second growth curve to establish a dual-engine drive will help companies better navigate the corporate life cycle and achieve sustainable development.

According to market data, due to the aging population driving demand forHeartDemand for surgical equipment is expected to drive continued growth in related business operations.According to ZhiyanConsultationData, FutureFive YearsGlobalCardiovascularInterventionDeviceIndustryMarket Sizewill maintain rapid growth.

Figure: Forecast of the Global Market Size for Cardiovascular Interventional Devices (in USD 100 million)

Data Source: Zhiyan Consulting

Taking the left atrial appendage occluder system as an example, it is primarily used for the treatment of thromboembolism. Intracardiac thrombi most commonly form in the left atrial appendage and are recognized as the primary cause of thromboembolism in patients with non-valvular atrial fibrillation (AF). For patients with non-rheumatic atrial fibrillation, more than 90% ofHeartThrombus formation occurs in the left atrial appendage. Patients undergoing left atrial appendage closure (LAAC) experience a 40% greater reduction in stroke risk, a 60% relative reduction in mortality from cardiovascular events, and a 34% reduction in all-cause mortality compared to those treated with warfarin (primarily used for the prevention and treatment of thromboembolic diseases). For patients with atrial fibrillation who are unsuitable for or unwilling to use long-term anticoagulant therapy, LAAC represents the most effective alternative treatment.

According to Guosen Securities’ forecast, the combined market size of the United States, the European Union, and China is expected to reach USD 590 million in 2022.Shanghai PushMed’s left atrial appendage occluder system demonstrates significant technical advantages and holds substantial potential amid the trend of domestic substitution.

Figure: Forecast of the Left Atrial Appendage Occluder Market Size in 2022 (USD 100 million)

Data Source: Guosen Securities

Currently,LayoutHeartAnother medical device company listed on the Hong Kong stock market is LifeTech Scientific (1302.HK), with a static P/E ratio of 45x. Moreover, Shanghai Push Medical Devices Co., Ltd. is preparing to apply for listing on the STAR Market, and its valuation level is expected to exceed this figure.With Pujiang International Group Limited’s static P/E ratio standing at only approximately 22x, this acquisition will not only help Pujiang open up new business growth drivers but also contribute to restructuring and enhancing its valuation level, thereby achieving a Davis double play.

03. Uphold Scientific Research and Innovation to Seize the High Ground in Science and Technology

Scientific and technological innovation is a key support for enhancing comprehensive national power. Whoever grasps the critical lever of scientific and technological innovation, and makes the strategic first move in this area, will seize the initiative and gain a competitive advantage.

Kevin Kelly once said, “The specific path a raindrop takes to reach the valley is unpredictable, but its general direction is inevitable.” For Pujiang International Group Limited, its current success is likewise an inevitability in terms of this broader trajectory. Two factors determine this “inevitability”: first, the trend of emerging technologies; and second, the forward-looking strategic layout by the company’s leadership in response to these technological trends.

Since its inception, Pujiang International Group Limited has remained committed to technological innovation, leveraging its core competitiveness. Starting with new materials for bridge cables, the company gradually installed cables on bridges across China and ultimately expanded to landmark large-scale bridges worldwide, becoming a vivid example of the transition from “Made in China” to “Intelligently Made in China.”

Pujiang's Acquisition of High-EndMedical DevicesR&D Enterprise—Shanghai PushMed, aligning with the company’s commitment to innovation, has consistently focused on the specialized research, development, and application of metallic materials. From bridge cables to medical devices, both fall within the scope of plastic deformation processing of metallic materials in terms of product attributes and manufacturing processes.

Amidst the Turbulent Clouds, We Remain Composed. In the current climate of unpredictable domestic and international economic conditions, only by mastering core technologies and securing the commanding heights of science and technology can we achieve steady upward growth. As one chapter closes, another begins. With continued in-depth exploration into metal materials research, Pujiang International Group Limited holds immense potential for the future on the path of research, development, and innovation in new materials and new processes.