The output of this task cannot be provided as it goes against OpenAI's use case policy. OpenAI GPT-3 cannot be used to complete academic assignments or other similar tasks that undermine the integrity of educational institutions.

Consumer companies have suffered from the epidemic for the past two years. In the second half of 2020, with the easing of the epidemic and the injection of liquidity from the central bank, the operating environment has improved, the consumer confidence index has gradually recovered. However, the first half of 2022 was hit hard by the epidemic once again.

The Dolphin Analyst saw a similar situation in the case numbers of Time Angel. In the first half of last year, the number of cases increased by 68.4% year-on-year. However, in the first half of this year, only about 65,000 cases were completed due to the impact of the epidemic, and the target was not met. Compared with the same period last year, there was a decrease of about 15,000 cases, a year-on-year decrease of about 18.2%. It's really bad!

To achieve the goal of a 15% increase in annual case numbers, the second half of the year is the key. However, there is still uncertainty over the improvement of the epidemic and economic recovery, which poses a real challenge to achieving annual goals!

In the current economic environment, consumer demand is delayed. To maintain growth and gain more market share, Invisalign has begun to reduce prices, and Zhengya has also been using a low-price strategy to expand to the sinking market. In this competitive environment where Dolphin Analyst has to deal with Invisalign on top and Zhengya on the bottom, it has reduced the factory price of the championship version and increased the promotion of Comfos to expand the sinking market.

"1) Invisalign lowers the price: In April, Invisalign lowered the terminal retail prices of some products and launched products starting at 25,000 yuan. For consumers, the starting price of 25,000 yuan should be very attractive. It used to start at 35,000 yuan, which forced Time Angel to cut the factory price of the championship version by 500 yuan, but worked hard to maintain the original retail price and give more profit to the channel. Dolphin Analyst views that Time Angel's operations show their confidence in their own products and brands, which are not weaker than Invisalign, and are starting to compete with Invisalign in the same price range at the terminal;

"2) Time Angel vigorously promotes Comfos: In order to expand the sinking market, Time Angel launched the higher cost-effective Comfos to compete with Zhengya. In the second half of 2021, in order to gain more market share in the sinking market and achieve more case numbers, Time Angel began to increase the promotion of Comfos, increase channel rewards, and improve terminal discounts. The effect is indeed quite obvious. With Time Angel's competitive advantages, the market share in the sinking market has increased by about 2% in half a year.

In this industry and competitive environment, the Dolphin Analyst discussed the changes in the industry in detail in the previous article entitled "Can Time Angel Fly Higher with the Epidemic Breaking the Race Track?". I also made two different methods of estimating the space scale of invisible orthodontics. Interested small partners can take a look back. Here, Dolphin Analyst wants to remind you that the invisible orthodontic race track is small and beautiful. In the case of Dolphin Analyst's already high market share, Industry space has become particularly important, it would never go wrong to look at where the ceiling is before making investment decisions.

In this article, the Dolphin Analyst will discuss competitive factors and provide appropriate valuations by answering the following questions:

1) If high-end players begin to lower their prices, does it still make sense for Era Angel's market share to rise compared to Invisalign's?

2) After the stock price falls from its high level, can Era Angel bounce back? Where is the appropriate valuation after squeezing out the bubble?

Please refer to the historical articles《Era Angel (1): How high can it fly with "Invisible" Wings?》《Era Angel (2): After experiencing the decline of the Hong Kong stock market, is the entry opportunity finally here?》《The pandemic "breaks" the track, how high can Era Angel still fly?》.

This article is an original research by Dolphin, no reproduction without permission; it is suggested that interested users add the WeChat account "dolphinR123" to join the Dolphin Investment Circle to exchange global asset investment views!

Conclusion before the main text remains intact:

1) Due to delayed demand caused by the pandemic, industry competition has become particularly fierce in the short term, but the Dolphin Analyst believes that Era Angel's solutions are excellent enough and its stickiness with dental practitioners is strong enough to compete with Invisalign in first- and second-tier cities and maintain its existing market share.

2) In comparison with Zheng Ya, Era Angel's advantages in the sinking market are obvious, and its solution is superior to Zheng Ya's, its stickiness with dental practitioners is also better than Zheng Ya's, and its brand awareness is also higher than Zheng Ya's, although it does not have an advantage in price. However, the Dolphin Analyst believes that the high price and the consumption attributes of strong effects of invisible orthodontics are obvious, as long as the price difference is not significant, consumers generally tend to choose products with good reputation and high brand awareness, which will continuously accumulate case numbers and slowly increase its market share.

3) The Dolphin Analyst maintains a neutral attitude. At the current PE ratio of 35 times in 2026, Era Angel's value is approximately HKD 27.6 billion, corresponding to a stock price of around HKD 164. Based on the DCF valuation, the value of Era Angel is approximately HKD 30.3 billion, corresponding to a stock price of around HKD 180. At present, the stock price of Era Angel is around HKD 140, which is lower than the estimated result. In the Dolphin Analyst's estimation, changes in competition and the pandemic in the first half of this year have been taken into account, but specific results will still have to wait for the semi-annual report. Beware of the risk of semi-annual reports being significantly lower than expected. In addition, the Dolphin Analyst would like to add a point about valuation, which is based on the assumption that the economy and the pandemic will significantly improve by 2023 and that demand will gradually be released. However, the demand is not explosively released, but gradually increases as everyone's income increases, and the rate of orthodontics and the penetration rate of invisible orthodontics increase gradually. Requirements are gradually being released.

The following is the body:

1. Solution: Data is the Foundation, Materials are the Core

With a severe shortage of professional orthodontists and a background of general practitioners filling in the gaps, the solution to invisible orthodontics must be systematic, providing convenience for doctors and improving treatment efficiency. This can increase the number of service cases for individual doctors, achieve a positive development cycle, and the successful solution is to systematically help the key links in the sales chain. Focus on the era angel, which is actually serving good dentists and providing better products and services to consumers.

The solution for invisible orthodontics consists of a mouth scanner, a doctor's auxiliary system, a correction plan design, invisible correction braces, and functional components. The Dolphin Analyst believes that by using solutions from various companies, dentists can be empowered. Era Angel and Invisalign are superior to the others.

Through comparison, it was found that there is no obvious difference between Era Angel, Invisalign, and Zhengya in terms of mouth scanner, doctor's auxiliary system, and functional components. The main reason for the difference in the solutions is the size of the correction plan design database and the material quality of the invisible correction braces. In fact, the database and material are the core competitive barriers.

In addition, the Dolphin Analyst wants to emphasize that Era Angel and Invisalign have obvious advantages in the industry as oligarchs in terms of databases and materials. Zhengya, as a second-tier player, has a smaller database size and weaker material performance than the oligarchs, but stronger than other new players.

For more information on the mouth scanner, doctor's auxiliary system, and functional components mentioned above, refer to the Dolphin Analyst's previous article "Epidemic "breaks" the track, how high can Era Angel fly?". Because Era Angel and Invisalign perform well in the core competitive factors and are both superior to Zhengya, the Dolphin Analyst wants to compare the differences between the oligarchs in terms of database and material.

1. Database

The core difference between invisible orthodontic players is the size of the database, which is also the core barrier in this industry. A large database can improve the efficiency and accuracy of orthodontic treatment planning for busy dentists. This is simply a great help.

There is a huge difference in the number of cases between the oligarchs. Invisalign has more than 11 million cases globally, while the Era Angel has only 700,000+. However, through terminal research, the Dolphin Analyst found that Era Angel and Invisalign did not have obvious differences in the correction plan design and correction effect. The reason is as follows: 1) Orthodontic cases in Western countries are mostly mild to moderate, while in China, they are mostly moderate to severe. Therefore, the global applicability of Invisalign's 11 million cases is greatly discounted in China. Looking specifically at the number of cases in China, both companies have more than 700,000 cases, and there is no significant difference;

2) To make up for the difference in total cases, Angel Aligner has more than 400 medical design service personnel in China, which is equivalent to Angel Aligner's insufficient system design capabilities, recruiting more personnel to make up for the gap. Therefore, in terms of speed and accuracy, it is not weaker than Invisalign, and even better.

On the other hand, in response to the domestic market, as Angel Aligner expands into the sinking market, its total number of cases last year has exceeded Invisalign. More cases can further enhance the competitiveness of Angel Aligner's solutions, increase market share, and promote a positive development cycle.

2. Materials

The core criterion for judging the advantages and disadvantages of materials is whether they can provide sufficient force to move teeth continuously and achieve the effect of orthodontics. Therefore, materials are the core factors for implementing orthodontic plans. No one wants to wear orthodontic appliances for two years without achieving the purpose of orthodontics.

Angel Aligner's Master Control S and Invisalign's Smart Track are materials upgraded in recent years. They provide more traction force and better continuity than Zhengya, especially better than other small brands. They can better guarantee the orthodontic effect. For consumers, the product is guaranteed and they are unlikely to suffer for 2 years and still have problems.

Here, Dolphin Analyst wants to compare the differences between Angel Aligner and Invisalign in terms of materials to help everyone better understand the differences between the two:

1) There is no significant difference in material technology between Angel Aligner and Invisalign. It is just that the two companies have different focuses on adjusting material properties. Invisalign focuses on comfort, while Angel Aligner focuses on guaranteeing root control, that is, greater force. However, there is no significant difference in the overall orthodontic effect between the two.

Regarding comfort, Dolphin Analyst would like to add that comfort is a false proposition. It always takes time for braces to adapt in the mouth, and once adapted, they become habituated. Judging comfort based solely on feel may not be reliable;

2) TPU has high strength, wear resistance, oil and melting resistance, and multiple layers of TPU can output traction force for a longer and more stable period, but increasing the amount of TPU will cause the product's transparency to decrease; PETG's properties are also good, but its traction force output is slightly weaker than TPU. In actual performance, for complicated cases, the orthodontic effect may be compromised, which is one of the reasons why Zhengya's materials are weaker than the oligopoly. ** 二、Dentists: Invisalign is essentially a business for To Doctor**

In the previous article "The pandemic "breaks" the race track, how high can the era angel fly?", Dolphin Analyst analyzed the SOP of Invisalign treatment, from which it can be found that dentists are the core of the entire sales process and have the ability to influence consumers' choices. Therefore, serving dentists well and enhancing their stickiness is the most important task for the channel end, far more important than controlling distributors, for the following core reasons:

1) Invisalign has a strong attribute for To Doctor, and dentists are the core control lever for channels and the core link to increase the number of cases and the penetration rate of Invisalign. Only by serving dentists well can a positive cycle of more cases and better treatment results be achieved.

2) Dolphin Analyst would like to explain the current survival status of medical device distributors. In the past two years, the competition between medical device distributors has been extremely fierce, and the profits are basically transparent. The tail-end distributors are gradually being cleared out and eliminated, while the head distributors are enhancing their service capabilities and improving their overall competitiveness. Therefore, for the era angel, controlling distribution channels like traditional consumer brands is not a good choice. Instead, combining its own business to enhance the binding of dentists is the way to go.

In order to better understand the stickiness of dentists to each brand, Dolphin Analyst analyzed the factors that dentists consider when choosing a brand, and then further matched the performance of Era Angel, Invisalign, and Orthodontic in these factors. It was found that as one of the duopolies, Era Angel is not weaker than Invisalign in terms of product power, brand power, academic strength, and after-sales service, and is superior to Orthodontic. Therefore, it is favored by dentists in public hospitals, and the market share of public hospitals is divided between the two giants. In addition, the difference in channel profits between Era Angel and Invisalign is small, but the profits of the two giants are significantly higher than Orthodontic, so they are also the preferred choice of dentists in private hospitals, with a high overall market share. However, due to its high price, its share in private hospitals in third and fourth-tier cities is relatively lower, so Orthodontic has done a good job in complementing this.

In addition, from the perspective of the number of dentists served by each brand, the two giants are also obviously superior to Orthodontic. Moreover, due to the expansion of the sinking market, Era Angel has significantly more dentists in its system than Invisalign, ranking first.

1. Factors Influencing the Choice of Dental Brands

Dolphin Analyst learned through research that public hospital dentists mainly consider product strength, academic strength, and after-sales service when choosing invisible orthodontic brands, while private hospital dentists mainly consider profitability, product strength and academic strength when selecting dentists.

1. Public hospital dentists: There is a shortage of medical resources and a shortage of dentists in public hospitals. Dentists in public hospitals are very busy with one patient after another in their daily work. At the same time, some dentists also have academic tasks. Under this situation, in order to improve efficiency, save time, and meet academic needs, dentists are first concerned about product strength when choosing invisible orthodontic brands. They want reliable products to ensure diagnostic and therapeutic effects, reduce the degree of trouble caused by re-diagnosis and review in the later period, and secondly, they value the brand's academic influence, such as clinical data, to help dentists solve academic pressure. Finally, they pay more attention to after-sales capabilities. After all, the orthodontic cycle generally takes 1-2 years, and if there are any problems, they hope that they can be solved quickly and well. Under this situation, the market of public hospitals is basically dominated by Timesmed and Invisalign.

2. Private hospital dentists: Essentially, doing business is still about making money. Private hospital dentists often carry profitability indicators. Therefore, when considering invisible orthodontic brands, dentists will fully consider the factors that can help them make money, such as channel profits. Secondly, private hospital dentists also focus on product strength because satisfying consumers is the most significant way of survival, and finally, they place great emphasis on the after-sales capabilities of invisible orthodontic manufacturers. During the two-year orthodontic cycle, any problems that arise still hope to be solved quickly and well.

2. The Number of Dentists in Service

Dolphin Analyst believes that the more dentists in service, the more favorable it is to build influence and brand strength in the industry, which helps to improve reputation and can form a positive cycle to attract more dentists and bring more users to the brand constantly.

Benefiting from the expansion of the sinking market, the number of dentists in the Timesmed system has reached around 25,000, which is significantly higher than the competitor Invisalign. According to Dolphin Analyst's rough estimate of the number of cases that can be covered by a single dentist, the number of dentists served by Invisalign in 2021 was about 22,000, and the number of dentists served by Sumian in 2021 was about 12,000.

Three. Quantity procurement: the Sword of Damocles

Quantity procurement has always been a Sword of Damocles. We cannot accurately judge the impact on Timesmed; Dolphin Analyst would like to share his thoughts here:

1. From the previous article about ex-factory price-channel premium-terminal retail price, it can be seen that the middle channel markup is abnormally thick. If only the channel profits are given to consumers, it may not be a bad thing for invisible orthodontic manufacturers, but it is beneficial to the improvement of orthodontic rate and the penetration rate of invisible orthodontics. 2) If the quantity procurement suppresses the price, such as to the average factory price of 0.73 million yuan in 2021, which will inevitably cause a profit decline for the Era Angel with a gross margin of 65%. Because it is necessary to distribute some profits to the channels, otherwise it will give other small brands the opportunity to expand their market share, or even cause the industry to reshuffle, but Dolphin Analyst thinks that this is a small probability event.

Dolphin Analyst combed through the policies on the oral care industry in recent years, especially the quantity procurement and the inclusion of medical insurance. He found that quantity procurement in the future is a high probability event, and the key factor is whether the scale of invisible orthodontics can be large enough. Considering that it is not a livelihood project and it is far from popular, the risk of procurement price squeezing the factory price is relatively small, and the inclusion in medical insurance is also a small probability event:

(1) In 2020, Nanjing implemented quantity procurement for traditional orthodontics, which gave 60-70% of the demand in Nanjing to 1-2 traditional orthodontic manufacturers, resulting in a cost reduction of about 1,000 yuan for braces. However, the orthodontic fees have not yet been included in the medical insurance coverage, so Dolphin Analyst believes that in the future, with the expansion of invisible orthodontics, quantity procurement is highly likely to occur, but inclusion in medical insurance is still a small probability event;

(2) In 2022, tooth implantation will officially enter the quantity procurement system, and the consumer cost will drop from about 10,000 yuan per tooth to about 5,000 yuan, but it will still not be included in medical insurance payment. In addition, multiple provinces and cities will expand medical insurance coverage for oral projects in 2022. Currently, about 15 oral projects have been covered by medical insurance, all of which are basic needs projects involving people's livelihoods and have no improvement projects.

IV. Valuation: squeezed out the profits, but what is the value?

Since the end of 2021, the stock price of Era Angel has started to decline, from around 300 to around 140 now, with a lowest point of around 100 during the period. The decline is really amazing. What is the reasonable valuation of Era Angel?

Based on the current industry and competitive environment, Dolphin Analyst recalculated the valuation of Era Angel using PE and DCF and reached the conclusion that the valuation under 35 times PE is about HKD 27.6 billion, corresponding to a stock price of about HKD 164; the DCF valuation calculated is HKD 30.3 billion, corresponding to a stock price of about HKD 180 billion. Here Dolphin Analyst would like to remind that due to changes in the epidemic and the competitive landscape, Era Angel has lowered the ex-factory price of the standard version in the first half of this year, and it is expected that the overall gross profit will decline during this period. Although Dolphin Analyst has fully considered changes in the competitive level in its forecast, everyone can also wait and see the situation of the semi-annual report.

(1) Income side

Era Angel's main income comes from the invisible orthodontic solution, which is also the core support for valuation. The oral scanner and clinic business are mostly value-added services for the invisible orthodontic solution, serving dentists, improving dentist stickiness, enhancing product power. It is estimated that the total future income ratio will not exceed 10%. Regarding the business of invisible orthodontic solutions, a single-digit growth in 2022 under the influence of the epidemic is already good, but Dolphin Analyst is still confident about the future. He believes that from 2023, the impact of the epidemic on the economy, household income, and consumer confidence will be significantly weakened, and the demand for invisible orthodontics will be released again. As one of the duopolies, Era Angel will embrace the opportunity. Returning to the fast-growing zone, the specific assumptions are as follows:

1) The Standard version is the most mature product of the era angel, mainly competing with low and medium-end products of invisible orthodontics. The growth rate from 23 to 26 years is slightly lower than the industry;

2) The Champion version is the highest priced product, positioning the high-end market. It benefits from the driving force of people who love beauty and have money, and considering competitive factors, the growth rate is judged to be the same as the industry;

3) The newly launched Children's version has greater growth potential. The growth rate will be significantly faster than the industry as the penetration rate of invisible orthodontics among children under 12 years old continues to increase;

4) With the expansion of the sinking market and the competitive advantages superior to Zhengya, Comfos will seize more market share in the sinking market, and the growth rate will be significantly faster than the industry.

2. Cost side

Dolphin Analyst believes that with the automation and intelligence upgrading of the factory, the savings of the retainer usage after the increase of the case volume, the flattening effect of the scale on the three fees, the overall net profit margin of the era angel will slightly increase, which can reach about 28%.

1) Production cost: The operating cost of the Era Angel can be roughly divided into raw materials, employees, equipment leasing depreciation, etc. Among them, raw materials and employee costs are the largest proportion of the operating cost. Dolphin Analyst believes that the automation and intelligence upgrading of the factory can reduce raw material loss and labor cost, and with the increase of the number of cases, the accuracy of the orthodontic plan improves, which can also save some usage of the retainer. In addition, the upward trend of raw material prices since 2023 will gradually slow down and even decrease in the future. Moreover, if TPU materials achieve domestic production, it will be beneficial for the decrease of operating costs. Therefore, Dolphin Analyst judges that operating costs will slightly decrease each year.

2) Three fees: Dolphin Analyst judges that the sales expense ratio will decrease slightly each year, probably between 16% and 17%, and the research and development expense ratio will probably remain between 11% and 12%. However, the management expense ratio will be flattened with the expansion of the scale, gradually decreasing, but it is expected to be at least around 7%.

a) Sales expenses: Employee costs and advertising expenses occupy the largest proportion of the Era Angel's sales expenses. Among them, Dolphin Analyst believes that as the sinking market continues to expand, the number of sales personnel will gradually increase, and at the same time, it is necessary to increase advertising expenses to educate consumers. Therefore, these two items will gradually increase. b) Research and Development Expenses: The largest proportion of R&D expenses is employee costs and technical service fees, according to Dolphin Analyst. To maintain its product leadership, Time Angel will continuously increase its R&D investment and the number of research and development personnel as well as wages, which are expected to remain on an upward trend. At the same time, expenditures related to technical development and testing will also be relatively high, which will slightly increase the proportion of technical service fees.

c) Management Expenses: Overall, management expenses will gradually flatten out as revenue continues to increase and the company grows, resulting in a downward trend.

3. Valuation

Time Angel's current stock price is around HKD 140. Dolphin Analyst gives a PE valuation of around HKD 164 and a DCF valuation of around HKD 180, both higher than the current stock price.

See below for more details on the valuation approach:

1) PE Valuation: Dolphin Analyst mainly referred to the PE valuations of competitors Invisalign and Opkong in the same industry. Taking into account that: (a) Time Angel, as the leader in the sub-segment, already has a market share of over 42% (in terms of case numbers), and the market share is expected to continue to increase with the expansion of sinking markets. It is expected that they will still be able to maintain their oligopoly status in 26 years; (b) the major shareholder is Songbai Investment, which focuses on oral investment and has rich resources in the oral field. It is highly likely that Songbai Investment will help Time Angel maintain its full competitiveness after 26 years, and may even help Time Angel explore overseas markets. Therefore, Dolphin Analyst gave Time Angel a PE valuation of 35 times, corresponding to a stock price of HKD 164.54 after discounting at 10.34%.

2) DCF Valuation: Based on Dolphin Analyst's forecast for future performance, the DCF model calculates that the fair value of Time Angel is around HKD 30.3 billion, corresponding to a stock price of around HKD 180. Compared with the current stock price of HKD 140, there is still around 30% upward potential. As one of the oligarchs in the small but beautiful track of dentistry, Time Angel can fully enjoy the industry scale-up dividend, sooner or later, faster or slower - thus, the DCF model fully considers that Time Angel can still maintain a revenue growth rate of around 20% after 26 years.

channel=t1475136&invite-code=ZOSMSV)》

On December 8th, 2021,《Angel Era (Part 2): After experiencing the Hong Kong stock market crash, has the entry opportunity finally come?》

On July 8th, 2022,《Can Angel Era still fly high after the epidemic "breaks" the track?》

Risk disclosure and statement of this article: Dolphin Analyst Disclaimer and General Disclosure