Report guide
We believe that the short-and medium-term revenue growth of CGT-related equipment-driven companies, gradual and integrated product upgrading is the main logic of the company's growth, and the steady growth of testing / isolation / sterilization products is expected to provide stock cash flow, giving a "overweight" rating for the first time.
Main points of investment
Tyrin creature: cell equipment upgrade, growth kinetic energy switch
Benefiting from the boom in downstream CGT capital expenditure, we believe that the company's cell preparation / reassembly workstation business income is expected to grow at a compound growth rate of 100% in 2022-2024, driving the overall income growth CAGR to about 35%. 1 Business composition: the company's incubator (about 30-35% of revenue in 2016-2020, the same below), aseptic isolator (25-30%), and VHP sterilizer-TOC analyzer (15-20%) account for a relatively high proportion of sales. the company's cell preparation / reassembly workstations account for about 1.9% of total revenue in 2020, and we expect cell preparation / reassembly workstations to account for more than 10% of total revenue in 2022-2024.
2 growth trend of stock business: we believe that the market for microbiological testing and sterilization equipment (incubators, sterilizers, analyzers, etc.) is growing steadily, competitors are scattered, and the company has certain technical advantages and sales base in this field. We expect to maintain steady growth.
3 growth trend of new business: it is reported in the third quarter of 2021 that the contract debt balance is nearly 79 million yuan, which is mainly contributed by the isolator series products. General equipment companies take into account the contract liabilities when 30% of the order is paid and not shipped. From the trend of contract liabilities and the trend of industry capital expenditure, we expect that the income of 2022-2024 cell preparation / reassembly workstations is expected to maintain a high growth rate.
Industry: CGT R & D + closed aseptic regulatory driver
(1) Clinical-sales: the pipeline is mainly in the early stage, with a high proportion in China. We estimate that the global sales of CAR-T products will be about US $15-2 billion in 2021, and the number of CAR-T clinical phase I and phase II projects in China will grow rapidly from 2019 to 2020. We expect that the R & D capacity construction of early projects will be the main body of capital expenditure of CGT projects in China at this stage.
2 equipment-environment: closed-automation is the trend, isolation system is the alternative. From the EIA, we can see the equipment demand of capital expenditure & brand preference, the proportion of isolator / cell workstation is very low (only 2-3 times in 30 + cases), and R & D equipment favors overseas manufacturers such as Semefi. The global survey shows that only 9% of CGT production uses isolator + Cramp D environment. We believe that the cell workstation is essentially a CGT product closed, aseptic R & D / production isolator system, which is in line with the direction of GMP supervision and is expected to reduce costs (closed automation production is expected to reduce production costs by 37%), replacing the widely used "clean room + biosafety cabinet".
Open system. The cost of R & D capacity construction is not the key to equipment selection, and the demand for total production equipment is relatively low. we believe that with the increase of commercial pipelines and GMP strengthening the supervision of aseptic closed environment, the proportion of isolation systems such as cell workstations is expected to increase.
3 demand estimation: the equipment demand is expected to reach 650-700 units per year in 2023. Assume that 100% incremental investment uses cell workstations, corresponding to the total market capacity of about RMB 10-11.5 billion (refer to the unit price of RMB 1.6 million / unit estimated by Tailin Biology in the announcement); assume that about 1% Universe 3 uses cell workstations, corresponding to the total market capacity of RMB 30-4 billion.
Company: integrated & progressive product upgrade
Marginal change: product upgrades may be the company's biggest change in 2022-2024. 1 the proportion of high unit price products increased, the proportion of "isolation technology series" products with an average unit price of 35-400,000 yuan per unit increased, and the proportion of 1.5 million yuan per unit of products (cell preparation / sub-assembly workstations) in this series further increased, reflecting the upgrading of the company's integrated and modular technology in the field of gene cell therapy production. 2 New customers and new products lead to overall revenue growth: according to the company announcement, as of April 2021, "the issuer has signed a number of supply contracts for related products (including 19 cell preparation workstations and 10 cell aseptic sub-assembly workstations) with 17 cell therapy customers, including Mingming Giant Nuo, Shanghai Pharmaceutical, BGI, Shanghai Bangyao Biology, etc. (among them, there are 19 cell preparation workstations and 10 cell aseptic sub-assembly workstations). Among them, the contract amount of completed delivery is more than 21 million yuan (a total of 26 sets), and the amount that has not yet been shipped is about 3.8 million yuan (a total of 3 sets), while the related income in 2020 is only 3.8 million yuan. We are optimistic about the rapid growth trend of the company's cell preparation / sub-assembly workstation products.
Capacity preparation: the production capacity will be moved from 2021 to 2023, and the production will be accelerated after 2024. The company's convertible bond project plans to raise 300 million yuan, the construction period is 36 months, and production will gradually reach production within 4 years after completion. Assuming construction starts in 2022, we expect to start construction gradually in 2024-2025. The new production capacity corresponds to the total output value of cell therapy equipment of about 663 million yuan. Even considering the potential competitive factors of price reduction (assuming a price reduction of 30-50%), the income of cell therapy related equipment after production is expected to reach 70% +. In terms of rhythm, from 2021 to 2023, we focus on the growth of production capacity through technical transformation, scheduling adjustment and other factors. After 2024, we focus on the progress of new production and the growth of industry demand brought about by the commercialization of cell therapy products.
Other business sectors: laboratory consumables, microbiological testing, sterilization products, demand side support, expected revenue to maintain steady growth.
Profit forecast and valuation
We expect the company to achieve operating income of 270 million yuan, 350 million yuan and 480 million yuan from 2021 to 2023, an increase of 33%, 33% and 37% over the same period last year, and a net profit of 70 million yuan, 90 million yuan and 120 million yuan, up 36%, 34% and 36% over the same period last year. The corresponding EPS is 1.27,1.71 and 2.32 yuan per share, respectively. The closing price on December 24, 2021 corresponds to 73 times PE in 2021 and 54 times PE in 2022, which is higher than the average of comparable companies. We believe that it may reflect the market valuation premium for the company's high-growth business segment (such as cell preparation / sub-assembly workstations and other equipment). We believe that CGT-related equipment is expected to drive the company's short-and medium-term performance growth, gradual and integrated product upgrading is the main logic of the company's growth, and the steady growth of stock testing, isolation and sterilization products is expected to provide cash flow, giving the "overweight" rating for the first time.
Risk hint
Order delivery cycle-volatility risk, price reduction risk caused by fierce market competition, new product promotion schedule is not as fast as expected risk, capacity construction speed is lower than expected risk and so on.