Event: on the evening of April 18, the company released its 2021 annual report.

The performance was in line with expectations, with a 31% year-on-year increase in net profit in 2021, with revenue of 283 million yuan in 2021, an increase of 42% over the same period last year, and net profit of 63.5 million yuan in 2021, an increase of 31% over the same period last year. Of this total, Q4's revenue in a single quarter was 101 million yuan, an increase of 52% over the same period last year, and its net profit was 21 million yuan, an increase of 35% over the same period last year. In 2021, the company's sales gross profit margin was 62%, a year-on-year decline in 1.0pct, a year-on-year decline in net sales profit margin of 22%, a year-on-year decline in 1.7pct. The decline in net profit margin was mainly due to increased research and development costs in 2021, resulting in overall performance and revenue in line with expectations.

Revenue of isolation series products increased by 153% compared with the same period last year; contract liabilities increased by 105% year-on-year, and future performance was guaranteed. In 2021, the company's revenue from isolation technology series was nearly 94 million yuan, a year-on-year increase of 153%, accounting for 33% of total revenue and an increase of 14.6pct over the same period last year. According to the sales data, the sales of the isolation technology series reached 244 units in 2021, an increase of 165% over the same period last year. We believe that the rapid growth of this sector may be partly due to the delivery of projects such as cell workstations. In addition, the company's contract debt in 2021 was 91.56 million yuan, an increase of 105% over the same period last year, and its future performance is expected to continue to increase.

If COVID-19 self-test follow-up open, then the field will provide NC film market space of about 3 billion yuan NC film for COVID-19 detection kit of one of the vital materials, according to our estimates, each kit in the NC membrane cost of about 40 million yuan, from a short-term point of view, to Shanghai, for example, we expect 2022 NC film market space of about 40 million / month (equivalent to about 480 million / year). In March 2022, the National Health Commission issued the notice on issuing novel coronavirus Antigen Detection Application Program (trial). It is formally proposed to add antigen detection as a supplement on the basis of nucleic acid testing. From a medium-and long-term perspective, the market scale of NC membrane in COVID-19 self-testing is expected to reach 3.4 billion / year.

Ten years to grind a sword, the company developed a new product NC film, high performance growth is expected to speed up again!

At present, NC film qualified suppliers are mainly imported, foreign brands are mainly Whatman (Schleicher & Schuell), Sartorius, Millipore, Pall, Thermo, India MDI, etc., domestic brands are mainly Shantou Yineng, Suzhou Tianren. Boosted by COVID-19 antigen testing, the global supply and demand of NC membrane is tight, which will bring opportunities for domestic substitution. The company has devoted itself to research and development in the field of microporous membrane for more than ten years, and its technology has reached the international advanced level. Recently, it has successfully achieved small batch production of NC membrane, and domestic substitution has gone further. We estimate that the company's 2022 NC film is expected to speed up the company's performance, and the future will form a two-wheel drive situation of NC membrane and cell workstation.

Profit forecast

It is estimated that the company's homing net profit from 2022 to 2024 will be 1.6 million yuan, 2.1 billion yuan, an increase of 153% over the same period last year, 30%, 21%, and 18X, corresponding to Pway E 29, 22, 18X. Considering the tight supply and demand of NC membrane under the epidemic, the gradual release of the company's new NC film is expected to further boost the company's performance and adjust its rating to "Buy".

Risk hint

1) the competition in the NC film market worsened and the price fluctuated sharply; 2) the development of the downstream COVID-19 self-test market was not as expected.