Key points of investment
Event: 2021H1 achieved operating income of 150 million yuan, an increase of 87.1% over the previous year; achieved net profit of 45.8 million yuan, an increase of 136.3% over the previous year; achieved net profit of 45.16 million yuan after deduction, an increase of 591% over the previous year. The performance was in line with our expectations.
Q2 continued to grow rapidly, and operating cash flow increased dramatically: on a quarterly basis, the Q2 company achieved operating income of 86.55 million yuan, an increase of 48% over the previous year; it achieved net profit of 31.74 million yuan, an increase of 30% over the previous year, and its single-quarter performance continued to grow rapidly. The sales expenses of 2021H1 company were 30.2 million yuan (+38.7%, same as below), the sales expense ratio was 20.47% (-7.17 pp); the management expenses were 13.35 million yuan (+98.7%), and the management expenses rate was 9.05% (+0.53 pp), mainly due to increased remuneration and IPO-related expenses; R&D expenses were 12.84 million yuan (+12.2%), and the R&D expenses rate was 8.7% (-5.81 pp). 2021H1 achieved operating cash flow of 33.25 million yuan, an increase of 163.7% over the previous year.
The allergy market space is broad, and the company's advantage as a domestic leader is obvious: China has more than 300 million allergy patients. The allergy testing market has just started, the testing rate is very different from developed countries, and the potential market is broad; the difficulty of allergen testing technology, the variety of allergens, and the high cost of hospital conversion have led to high technical and commercial barriers, and the company's competitive advantage as a domestic leader is remarkable. As of June 30, 2021, the company has registered 13 types of IgE allergens. The allergens sold with a registration certificate and the allergens being registered and developed cover 94 allergens, including registered and ongoing research projects. Single point allergen testing and combined testing projects will cover 111 allergy testing projects, and the continuous increase in the number of allergens will continue to strengthen the company's leading position in the industry. In addition to this, the company's allergic chemiluminescent products are in the registration stage and are expected to become a new growth point for the company's profits in the future.
Rapid release of self-free chemiluminescence, simultaneous expansion at home and abroad: the self-free testing market is still dominated by traditional enzyme free reagents from imported manufacturers, and there is plenty of room for import substitution. The company's registered and sold self-exemption programs using nanomagnetic particle chemiluminescence testing covered 44 types and 1 PCT (procalcitonin) test reagent, and the self-exemption project under development added 16 projects. With the introduction of high-speed chemiluminescence instruments and the continuous enrichment of the testing menu, the company's self-test product sales performance continues to grow, and its market share continues to expand. While the domestic market share continues to grow, the company is also actively participating in the development and competition of the international self-exempt testing market through chemiluminescence testing technology. At present, related products have completed entry into the European market and signed cooperation agreements with customers in Germany, Spain, Italy, etc., and an international layout has initially been realized.
Profit Forecast and Investment Rating: We maintain our net profit forecast for 2021-2023 at $113/154/203 million. The current market capitalization corresponds to 2021-2023 PE 35 times, 25 times, and 19 times, respectively, maintaining the “buy” rating.
Risk warning: risk of increased market competition; risk of product development falling short of expectations