Main points of investment

Recently, key Egg released its 2018 annual report. During the reporting period, the company realized operating income of 686 million yuan, an increase of 40.45% over the same period last year. The net profit attributed to shareholders of listed companies was 250 million yuan, up 28.67% over the same period last year. Net profit belonging to shareholders of listed companies was 213 million yuan after deducting non-recurring profits and losses, an increase of 23.19%. EPS 1.34 yuan was realized in the reporting period.

Profit Forecast and valuation: the company is a major supplier of in vitro diagnostics in China, especially in the field of POCT, covering cardiovascular disease diagnosis, inflammatory disease diagnosis, kidney disease diagnosis, blood glucose detection and other major disease areas. With the iteration of consumption upgrading and the needs of graded diagnosis and accurate medical care, POCT, as a golden subdivision of in vitro diagnosis, has a large market space. We have adjusted the company's profit forecast and estimate that the company's EPS from 2019 to 2021 will be 1.79,2.33,3.01 yuan respectively, and the PE corresponding to the stock price on April 10, 2019 will be 22x, 17x and 13x, respectively, and will continue to be rated as "prudent overweight".

Risk hints: further intensification of market competition, risk of loss of confidentiality of core technology, risk of change in health care reform policy, etc.