Investment points:
The company is a leading supplier of upstream raw materials for in vitro diagnostic reagents in China. It has been deeply involved in the industry for 20 years. It has broadened the space for business growth through the development of open instrument platforms and semi-finished reagent solutions, and is expected to usher in new development.
Leading IVD raw materials, performance has grown rapidly since the pandemic
The company's core raw materials cover products such as antigens, antibodies, and molecular enzymes, covering all mainstream testing platforms such as immunology, molecules, and biochemistry. It is rich in variety and advanced technology. With the rapid expansion of COVID-19 business, overall performance has grown rapidly in recent years. In 2021, the company's overall revenue was 2,332 billion yuan, up 118.44% year on year, and 2017-2021 operating revenue CAGR was 80.17%; net profit was 1,361 billion yuan, up 113.70% year on year. Excluding the impact of COVID-19, 2021 revenue was 722 million yuan, up 95.12% year on year. Regular business revenue CAGR for 2017-2021 was 34.42%, showing a rapid growth trend.
The IVD industry is booming, and upstream raw materials have risen to prominence
Benefiting from the rapid development of the downstream in vitro diagnostic industry combined with the impact of the COVID-19 pandemic, demand for upstream raw materials continues to be strong, and the industry is booming. The market size of in vitro diagnostic raw materials is growing rapidly, with a CAGR of 25.9% in 2015-2019, an estimated market capacity of 10 billion yuan in 2020, and a CAGR of 18.6% in 2020-2024. Due to the variety of products, complex technology, and high customer stickiness, the industry is scattered. Overseas companies have occupied the main market for many years, and the localization rate in 2019 was only 12%. As the popularity of domestic brands continues to rise, leading domestic enterprises are expected to continue to increase their market share in the future, and there is plenty of room for growth.
Build an open instrument platform and further open up space for growth
Since establishing an overall solution development strategy in 2017, the company has continuously promoted the collaborative development of open instrument platforms, reagent solutions and reagent raw materials, empowering the in vitro diagnostic industry chain with open platforms, providing diagnostic industry customers with overall diagnostic solutions that meet different application scenarios, helping customers efficiently and economically complete product development and market supply, and promoting cost reduction and efficiency throughout the industry. Among them, the open instrument platform is beginning to bear fruit. Sales of chemiluminescence instruments have increased from 183 units in 2020 to 1,088 units in 2021, revenue has increased from 25 million yuan to 103 million yuan, and there is still plenty of room for growth in the future.
Risk Reminder
Reduced demand for COVID-related products has led to performance fluctuations; increased market competition has led to lower product prices; and international trade frictions have affected overseas exports.