AngelsIt was dubbed "the first listed company in China specializing in invisible braces," but it is actually "the first listed company in the medical device sector, which is vertically integrated with the oral health industry." Before and after its listing, many media outlets narrowed down the company's name to a single product category, presumably to focus attention or to create a competitive marketing strategy.

Overall, since its listing in June last year, Angelalign (06699.HK) has become more than just a focus of industry attention. As a public company, its core business has secured a leading position in key industry categories, especially since its inclusion in the Hang Seng Composite Index and the FTSE Russell Index.Its strategic layout, development trend, and internal governance have transformed their transmission effects on the industry economy and even the industrial economy from implicit to explicit.

Recently, Angelalign released its first annual report since its IPO, and the results were impressive. Many mid-to-upper-tier peers expressed their admiration:Despite the challenges posed by the pandemic, remarkable achievements have been made.Several key data points in the annual report have reassured many industry stakeholders, who feel as if they've received a "reassurance."

However, when most people receive an annual report, they first focus on the three tables, because they contain data and valuable information. They often don't have time to read through the hundreds of pages of the report in detail. Naturally, changes in data and even stock price fluctuations are always topics that the public enjoys reading about.In fact, by simply looking at the data in a table, we can only know: So that's how it is; but by carefully reading an annual report, or even the opening address, we can gain a deeper understanding: Why is it possible to do this, and what can happen in the future?

Benefiting from the ecosystem support of its controlling shareholder, Angelalign demonstrates a strong advantage in terms of "equipment" compared to its competitors. According to its official disclosure, by 2026, the production capacity of its Wuxi-based aligner base will reach hundreds of millions of units. The first phase of the aligner base has now been completed, and its first production line has been launched (each automated production line is designed to produce 10 million invisible aligners per year, or 2.5 million per quarter).With such a large production capacity reserve, what are Angelalign's next steps? And what impact will it have on the industry?

This article will take an OKR perspective, guiding readers through a rereading of Angelalign's 2021 annual report. We will attempt to analyze the details of the speeches and disclosures.

After the noise, what else should industry professionals pay attention to?

01

Perceptual bias of "overestimation" and "underestimation"

"We should not overestimate the changes that can be achieved in just one year, nor should we underestimate the results that will accumulate over three to five years."

In his opening remarks at the annual report, Mr. Feng Dai, then Chairman of the Board of Directors of Angelalign, made the following remarks. He also holds another position as a partner of Songbai Investment Group (hereinafter referred to as "Songbai Investment"), the major shareholder behind Angelalign.

In fact, both "overestimation" and "underestimation" are cognitive biases or perceptual errors that deviate from average values. In social psychology, this is called "self-serving bias," which means that people tend to interpret positive and negative events in a way that enhances their self-image.Overestimating an industry or a company can easily lead to blind enthusiasm, while underestimating its commercial or individual performance often hinders the motivation for early or sustained investment.

This reminds us of the advice of the Greek philosopher Socrates: "Know thyself."Mr. Feng likely hopes that both the industry and the capital market will take a long-term perspective on the dental market and dental companies.Readers on the front lines of the industry should have a better understanding of this: only by taking steady and consistent steps can a business thrive in the long run.

Under the value of "long-termism," Mr. Feng broke down the achievement of his goals into five long-term strategic development directions: supporting doctors, going global, continuous innovation, popularizing orthodontics, and taking responsibility. Looking at the dynamics of Angelalign and Songbai Investment in the orthodontic ecosystem over the past year: from the research and development of new materials and tools, to building pathways for technology export, and then to the establishment of a collaborative member network… this is essentially a summary and refinement of their work.

However, after discussing the direction, actually taking the journey is a difficult task.Many dental companies have adopted the OKR (Objectives and Results) management approach. Whether a goal can be achieved depends not only on the strategic correctness of the objective (O) but also on the formulation of key results (KR), i.e., the path to achieve them.

Let's look at how Angelalign sets Objectives (O) and implements Key Results (KR):

02

Medical Intelligence Integration and OKR

Let's first compare last year's prospectus with the recently released 2021 annual report:

Image source: Angelalign's prospectus

This workflow diagram presents a clear picture and effectively illustrates AngelAge's partner relationships and product system. It is precisely based on this workflow's 180,000+ cycles that AngelAge achieved its 2021 results: total revenue reached 1.27 billion yuan, a year-on-year increase of 55.7%.Approximately 183,200 cases were achieved.The number of cases achieved increased by 33.1% year-on-year; among them, the number of cases achieved by Angel Classic (mass line), Angel Champion (premium line), Angel Kids (kids line) and COMFOS (cost-effective line) increased by 10.4%, 52.5%, 116.0% and 56.2% year-on-year, respectively.

To make it clearer for readers, the creators extracted the key points from the annual report and refined this flowchart, as follows:

Image source: Angelalign 2021 Annual Report, Good Dental Orthodontics

It can be seen that Angelalign has made breakthroughs in three areas over the past year:

• Product InnovationLaunched the new generation of adaptive polymer composite masterControl S and angelAttach precision control attachment systems, which are applied to the Angelalign product series; launched the Angelalign children's facial care solution;
• Digital technology servicesiOrtho has begun to be compatible with various intraoral scanning devices, added intraoral scanning sales business, and introduced the Angelalign Smart Aesthetic System into the invisible orthodontic solution design platform; it has also upgraded the Angelalign IRS Intelligent Root Bone System.
• In terms of intelligent manufacturingThe first phase of Angelalign's creative beauty base has been completed, and one of its automated production lines was commissioned in the first quarter of 2022 and has started production.

In her speech, Ms. Li Huamin, founder and CEO of Angelalign, mentioned that Angelalign has been exploring the path of "medical intelligence integration." So,What is "medical-intelligence integration"? Angelalign believes it is a dual-driven model of medical and technological innovation.

Since digitalization began to be incorporated into the production factors of the dental industry, orthodontics has embarked on a new round of interdisciplinary integration. In a broader academic context, the convergence of each discipline is triggered and facilitated by the exploration of significant scientific questions.

Historically, such crossovers and collisions, from academic concepts to commercial practices, have always maintained a kind of tension and dynamism. Therefore, we see that when the original discipline cannot solve new problems or new needs, or when complementary products/research/technological conditions are relatively mature, new ways of integration emerge.

Looking back, "medical intelligence integration" is an innovative concept proposed by Angelalign. The biggest difference between it and the industry's discussion of "digital intelligence integration" is that it incorporates the perspective of medicine and medical professionals.

Any public statement made by a brand demonstrates both its understanding of a matter and its public commitment.To determine whether a claim is a marketing tactic or a genuine claim, it is necessary to examine whether a company's words and actions are consistent.

Regarding the integration of healthcare and artificial intelligence, examining specific key benefits (KRs) primarily focuses on research and development. As of December 31, 2021, Angelalign had registered 117 patents and 16 software copyrights. However, according to the founders, since the beginning of 2020, Angelalign has published a total of 123 patents, exceeding half of the total number published since the company's founding in 2003. This means that many more intellectual property rights are likely still in the pipeline.

Angelalign's 2021 annual report disclosed its R&D investment for the year. Combined with data since 2018, Angelalign has invested a total of more than 300 million yuan in innovation and R&D, with its R&D investment accounting for about 10% of its revenue in each year.

In her 2021 annual report address, Ms. Li Huamin pointed out that Angelalign has accumulated profound knowledge in oral medicine and built the largest medical design service team in China's oral field. It has established a strong brand influence among doctors and patients and is also working hard to promote the healthy development of "digital orthodontics" in China together with doctors. In the future, it will continue to take the "customer first" value as the cornerstone of its development, continuously create value in the process of serving doctors, and grow together with doctors.

In his 2021 annual report address, Mr. Feng stated that, in his view, Angelalign's corporate culture should...Evolving from "strong execution" to "strong creativity".The annual report also revealed a detail about an innovative organizational culture:

Establishment of the Digital Oral Intelligence Research Institute:The company has developed various technology and data platforms and established the "AngelDaily Patent Reward Measures" to provide cash rewards and recognition to patent inventors. It focuses on three major R&D strategies: utilizing advanced theories and technologies, implementing a R&D talent strategy, and strengthening internal and external collaboration.We encourage the R&D team to unleash their creative passion by focusing on two main dimensions: platform construction and system design.

Image source: Angelalign 2021 Annual Report

It is said that Songbai Investment has always attached great importance to talent. The founders have even privately compiled statistics on the talent density and per capita output of upstream and midstream dental companies. Due to its complete industrial chain and corporate appeal, Songbai Investment has always ranked first.

Image source: Songbai Investment 2021 Dental Industry Talent Officer Training Camp

03

"Greater China" and "Greater World"

It is understood that Songbai Investment currently holds controlling stakes in and has strategic investments in dental companies that cover regions including Asia, North America, and Europe. In addition to its existing presence in overseas markets, Songbai Investment and Angelalign have jointly established CareCapital Aligner Tech LP, aiming to invest in and explore innovative digital technologies and products related to orthodontic treatment globally.

In her annual report address, Ms. Li Huamin also pointed out that looking ahead to 2022, while continuing to invest in research and development to meet the needs of doctors, extending product and technical services to a wider user base, and continuously upgrading intelligent manufacturing technology, China will gradually promote digital orthodontics to the world.

In early March of this year, PineBridge Investments announced two overseas strategic investments: orthobrain, a US-based oral technology and education company, and uLab Systems, the developer of uDesign, a North American chairside treatment planning software, and uSmile, an invisible aligner.

It's worth noting that at the end of last year, Songbai Investment also announced a comprehensive cooperation with Pute Medical, a leading domestic orthodontic company, gaining another important partner in the field of fixed orthodontics. It's not hard to see that...In the domestic market, Songbai Investment is gradually enriching its orthodontic and even dental medical scenarios to meet different needs.

In simple terms, as the scope of cooperation expands, Songbai Investment has been continuously building...The central hub for "bringing in" and "going out".According to reports, those currently connected to this system are industry leaders or companies with great potential.

So, to recap, Mr. Feng mentioned five strategic development directions in his speech."Going global" and "popularizing orthodontics" refer to "going overseas" and "going down to lower levels".Both of these major market trends naturally require insights into the medical field and doctors. From the perspective of the entire Songbai Investment ecosystem, everyone is working together to resonate and contribute to these two major trends.

In this respect, while others may still be making steady progress, the ecosystem companies invested in by Songbai Investment can theoretically achieve synergistic resonance across the entire ecosystem. This is particularly true for research, treatment workflows, and solutions addressing doctors' pain points, all of which have synergistic effects. Those interested can also follow the developments of these companies.

As for the efficiency of collaboration among ecosystem companies, it's currently impossible to verify. For companies like Songbai Investment and AngelAge, in addition to optimizing internal governance, they also need to address the issue of collaboration effectiveness between organizations. While the creators are certainly engaging in theoretical discussions, they genuinely hope that pioneers like AngelAge can provide a reference answer for the entire industry.

Postscript

As a public company, Angelalign's influence on the industry and the public has spread like ripples, and the issues it needs to address are becoming increasingly broader. For Angelalign and PineBridge Investments, improving corporate governance, actively undertaking more corporate social responsibility, and cultivating more outstanding talents for the industry are already issues of great concern.

In this dimension, Angelalign"Dragon Raising Project"as well as"Angels truly love to smile"With ongoing public welfare activities, efforts are being made to cultivate future invisible orthodontists and improve oral health awareness among teenagers. "Popularizing invisible orthodontic technology and raising dental health awareness among children in underdeveloped areas" will also be a longer-term issue, and will garner even more public attention in the long run.

Of course, for a brand, the best advantage is public attention, and the most difficult thing to achieve is also public attention. Angelalign addressed this in its annual report:We will continue to create value for our clients, expand the service reach of our doctors, promote public awareness of oral health, and contribute to the long-term implementation of the Healthy China strategy.。”

Angelalign has now submitted its first annual report card. Data accumulates and changes, and Angelalign's influence on the industry has profoundly impacted industry development, extending from products, services, distribution, and production to R&D. If we look at it from an industry historical perspective, Angelalign not only needs to use OKRs to respond to its stakeholders, but also to respond to this "era."

Recalling Mr. Feng's congratulatory message on the listing of Angelalign last year, he said: "A journey of a thousand miles begins with today."

A new round of the "Infinite Game" has begun. Good luck!

Edited by: Arendt

Graphic Designer: Texture

Proofread by: Huancai

Producer: Yue Yue