Behind the IPO aiming to raise more than five times the investment for expansion, BoMai Medical's conference expenses have quadrupled in two years.

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Guangdong BomaI Medical Technology Co., Ltd. (hereinafter “BomaI Medical”) plans to raise RMB 1.7 billion, of which more than RMB 1.0 billion is intended for capacity expansion.

A reporter from the Mingjing Finance desk of the Dazhong Securities News noted that during the reporting periods, BomaI Medical’s capacity utilization rate increased but the overall level was not saturated. The capacity utilization rates of its core products—coronary artery balloon catheters, peripheral balloon catheters, and guidewires—were the highest at 84.34%, 93.04% (data for the first half of 2025; 69% in 2024), and 76.59%, respectively. However, the newly planned capacity to be added through the proceeds is nearly 5.3 times the combined capacity of the three major products in 2024.

The operating and financial situation behind the expansion is also noteworthy. BomaI Medical’s meeting expenses surged more than fourfold within two years, while its asset-liability ratio is twice the industry peers’ average level. The company’s actual controller is also burdened with repayment/repurchase pressure arising from the bet.

Capacity not yet saturated; plan to expand with RMB 1.0 billion

Founded in 2012, BomaI Medical is a national-level “specialized, sophisticated, and innovative” “little giant” enterprise focused on vascular interventional medical devices, and one of the leading companies in China’s balloon catheter market.

For this IPO, BomaI Medical plans to raise RMB 1.7 billion. Of this, more than RMB 1.0 billion will be used for the Songshan Lake global headquarters project and the Hunan manufacturing base technology upgrade (Phase I).

Specifically, the total investment in the Songshan Lake global headquarters project is RMB 94,568.54 thousand, of which RMB 90,000 million is planned to be used from the proceeds. The project will be invested in two phases to build interventional medical device production lines, bringing in high-caliber talent to enhance the company’s production capacity for high-end interventional medical devices.

The total investment in the Hunan manufacturing base technology upgrade (Phase I) project is RMB 17,755.43 thousand, of which RMB 16,000 million is planned to be used from the proceeds. The project will renovate existing factory premises, build new interventional medical device production lines, and bring in high-caliber talent to enhance its production capacity for high-end interventional medical devices and their components.

According to the prospectus, the Songshan Lake global headquarters project plans to build new interventional medical device production lines. After reaching full production, it is expected to achieve annual production capacity of 14.05 million sets of various balloon catheters, catheters, and guidewires (comprehensive capacity); the Hunan manufacturing base technology upgrade (Phase I) project focuses on the production of key raw materials and core components. After reaching full production, it is expected to achieve annual production capacity of 15 million pieces of Hai Bo guan components and 2.5 million sets of various catheters and accessories.

BomaI Medical states that the implementation of the above two projects will effectively break through the company’s capacity bottlenecks in a timely manner, meet domestic and international market order demands promptly, and provide capacity support for the company’s sustained performance growth.

However, during the reporting periods, the capacity utilization rate of BomaI Medical’s core products has not yet reached a saturated state. The prospectus shows that, looking at full years, from 2022 to 2024, the capacity utilization rates of BomaI Medical’s coronary artery balloon catheters were 71.01%, 68.15%, and 84.34%, respectively; peripheral balloon catheters were 40.51%, 58.03%, and 69%, respectively. The guidewires’ capacity utilization rate also hovered around 70%, with the highest in 2024 at only 76.59%.

In 2024, when the company’s capacity and sales volume were at their peak, the sales volume of coronary artery balloon catheters was about 1.69 million units, peripheral balloon catheters about 230,000 units, and guidewires about 150,000 units. Meanwhile, combined production capacity was 2.654 million units, but after reaching full production, it is expected to achieve 14.05 million sets of production capacity (comprehensive capacity)—nearly 7 times the sales volume and about 5.3 times the production capacity.

From the perspective of sales growth rate, coronary artery balloon catheters were the company’s best-selling product, with sales always accounting for about 70% of operating revenue. Their volume grew from about 850,000 units in 2022 to about 1.69 million units in 2024. The two-year compound annual growth rate is about 41%. Even with such a high growth rate maintained, reaching an annual scale of 14.05 million sets would still require about six years.

For inventory, BomaI Medical’s inventory mainly consists of raw materials, work in progress, and finished goods, among others. The carrying values of inventory at the end of each period were RMB 84.725 million, RMB 94.7862 million, RMB 112.4416 million, and RMB 144.0227 million, accounting for the proportion of current assets at the end of each period of 28.10%, 24.70%, 22.33%, and 31.27%, respectively. The amounts of inventory price-decline provisions recorded during each period in the reporting period were RMB 3.2168 million, RMB 6.0486 million, RMB 2.8605 million, and RMB 4.9181 million, respectively.

Against the background that current capacity utilization has not yet been fully utilized and the sales growth rate is about 41%, the necessity of such a large-scale capacity expansion and its ability to absorb the new capacity are worth attention. With existing capacity not yet sufficiently utilized, on what basis does BomaI Medical support the logic of such large-scale investment through existing orders on hand or customer commitments? If future market expansion falls short of expectations, will the added massive capacity further increase the risk of capacity being idle, leading to huge depreciation and amortization that erodes profits and ultimately harms investors’ interests?

Meeting expenses surged more than fourfold over two years

In addition to expanding capacity, changes in BomaI Medical’s selling expense structure are also attention-grabbing. Although its selling expense ratio is slightly lower than the industry average, its meeting expenses have shown a jump-like growth.

The prospectus shows that during the reporting periods, BomaI Medical’s selling expenses were RMB 41.7832 million, RMB 62.7993 million, RMB 86.6944 million, and RMB 53.0660 million, and the proportion of selling expenses to operating revenue was 20.18%, 18.74%, 18.86%, and 17.54%, respectively.

The company’s selling expenses mainly consist of employee compensation and share-based payments, transportation and travel expenses, meeting expenses, publicity and promotion fees, etc. The combined proportion of the above expenses in selling expenses was 85.14%, 85.39%, 89.11%, and 86.18%, respectively, which is relatively high.

Among them, during each period of the reporting periods, the company’s meeting expenses were RMB 2.3368 million, RMB 5.0943 million, RMB 11.8045 million, and RMB 4.8582 million, respectively. The meeting expenses in 2023 doubled year-on-year, while in 2024 they surged more than fourfold compared with 2022. Over the 3.5 years, the total spending on meeting expenses was nearly RMB 24 million. BomaI Medical states that its meeting expenses mainly relate to academic conferences held by external organizations such as associations, hospitals, and doctors’ alliances.

As for the substantial increase in meeting expenses, the company explains that it is “driven by the need for promotion of newly launched products.” The main reason is that, with the launch and promotion of multiple innovative products and technologies, the company needs to publicize, disseminate, and educate the market about new products and new technologies through professional academic conferences. Therefore, the number of external academic conferences participated in through industry associations organized globally increased significantly year-on-year.

At the same time, the company’s administrative expense ratio also shows a trend that runs counter to industry trends. During the reporting period, BomaI Medical’s administrative expense ratio was 27.78%, 16.82%, 14.09%, and 23.94%, respectively. In the same period, the average administrative expense ratio of comparable companies decreased year by year, at 18.23%, 14.07%, 12.38%, and 11.01%, respectively. In the first half of 2025, when the industry average had fallen to 11.01%, BomaI Medical’s administrative expense ratio, however, rebounded against the trend to 23.94%, far above the industry average.

Against the backdrop of anti-corruption in the medical sector, the compliance of academic conferences is a key focus of regulatory review. What are the reasons for the sharp increase in BomaI Medical’s meeting expenses in 2023 and 2024? How does the company ensure that every meeting expense fully complies with domestic and international compliance requirements for academic promotion in the medical industry, and effectively prevent any conduct that might be viewed as commercial bribery?

Debt ratio far higher than the peer average

BomaI Medical’s financial condition is also worth attention, and its most prominent feature is its debt level, which is far higher than that of peers.

The prospectus shows that during the reporting periods, the company’s asset-liability ratio reached a maximum of 55.04%, while the average for comparable peers in the same period was only around 26%. This indicates that BomaI Medical’s asset-liability ratio is nearly twice the peers’ average level.

Even more noteworthy is that BomaI Medical’s long-term borrowings have surged. They jumped from RMB 33 million in 2022 to RMB 215 million in the first half of 2025. The prospectus further shows that at the end of each period during the reporting period, the company’s long-term borrowings were RMB 33.00 million, RMB 116.5313 million, RMB 212.5054 million, and RMB 215.2438 million, respectively. They accounted for 23.02%, 49.61%, 88.30%, and 86.71% of non-current liabilities, respectively. The main items are loans for mortgage and guarantees, secured loans, and others.

In response, BomaI Medical explains: “In each period during the reporting period, the company’s current ratio and quick ratio are lower than the average level of comparable companies, and the asset-liability ratio is higher than the average level of comparable companies. This is mainly because, as a non-listed company, the company has limited financing channels, whereas comparable companies in the same industry are all listed companies with broader financing channels and stronger debt repayment ability.”

“More specifically, the company’s current ratio and quick ratio are lower than those of comparable companies such as Yijü Medical, Guichuang Tongqiao, and Weitai Medical, and the asset-liability ratio is higher than those of Yijü Medical, Guichuang Tongqiao, and Weitai Medical. Compared with Lepu Medical and MicroPort Medical, it is close to their level. This is mainly because Yijü Medical, Guichuang Tongqiao, and Weitai Medical completed listing on the exchange in 2021 and after, obtained more proceeds, improved their asset-liability structure, whereas Lepu Medical and MicroPort Medical listed earlier. In recent years, their scale of additional financing has been relatively small, so the impact of their proceeds on the company’s asset-liability ratio has correspondingly weakened, and the asset-liability ratio has gradually rebounded.”

In addition, the company also has a series of atypical guarantee arrangements. The prospectus discloses that the company’s sales director Tian Wanshan, as well as natural persons named “Zhou Song” and “Liu Fenglan,” all provide personal guarantees for loans made by the company’s subsidiaries.

Requiring sales directors who are not the actual controller, not shareholders, and not senior executives/board supervisors to provide personal joint-and-several liability guarantees for debts of the company’s subsidiaries is indeed puzzling: is this a common financing condition, or is it due to insufficient company credit leading to special terms? If the company’s operations experience fluctuations and cannot repay its debts, the core executives would face the risk of personal assets being harmed. Would this shake the stability of the core team? Also, what exactly is the relationship between “Zhou Song” and “Liu Fenglan” and the company and the actual controller? Are there other potential liability arrangements that have not been disclosed?

Worth mentioning is that BomaI Medical previously signed special rights agreements with multiple well-known institutions, including Chuangtong Technology, Tencent Venture Capital, and the Social Security Changjiang Delta Fund, which include listed profit/repurchase “bet” (earnings guarantee) clauses. It is agreed that if the company fails to complete the IPO by the end of 2024, a repurchase obligation will be triggered. Public reporting shows that because the target was not achieved, in March 2025, He Ying and BomaI Medical repurchased equity from investors. The repurchase counterparties included Junhe Tongxin, Dongguan Investment Holding Group, and others.

Currently, most of the company’s “bet” clauses with most investors automatically terminate from the date the listing application is submitted. If the IPO fails, these clauses will resume effectiveness. At that time, the actual controller may face repurchase requests of an even larger scale.

What is the primary source of the repurchase funds in March 2025? Will it affect the company’s operating cash flow? If this IPO is not successful, how large is the potential total repurchase amount faced by the actual controller? Does the company have response plans? Will this jeopardize the stability of the actual controller’s control over the company?

Regarding the above related questions, a reporter from the Mingjing Finance desk of Dazhong Securities News previously sent a letter to the company. As of the time of publication, the reporter had not received a response from the company.

Reporter He Yuxiao

BomaI Medical’s capacity, production volume, capacity utilization rate, and sales and production figures

Comparison of debt repayment capability indicators with reference peer companies in the same industry

BomaI Medical’s composition of long-term borrowings