Key points of investment

Recently, the company issued an announcement and received a letter from League Agent (HK) Limited (“LAL Company”), the largest shareholder, on May 10, 2020, to learn that it signed a “Share Transfer Agreement” with Zhuhai Baolian Asset Management Co., Ltd. (hereinafter referred to as “Zhuhai Baolian”), a wholly-owned subsidiary of Gree Real Estate Co., Ltd. (stock code: 600185), on May 10, 2020, to transfer all of its shares. After this change in equity was completed, LAL Company no longer held shares in the Company, and Zhuhai Insurance Union became the largest shareholder of the Company.

Profit prediction and rating: As one of the leading enterprises in the domestic IVD industry, the company has a rich product range, a sound sales network, and has insisted on two-wheel drive for instruments and reagents for a long time. It is one of the few domestic companies that can provide fully automatic and flexible throughput testing system solutions and supply capabilities in molecular, biochemical and immunological fields. The company continues to lay out the Chaoyang business sector (chemiluminescence, molecular diagnosis, overseas business) through “independent development+mergers and acquisitions”. As new products are launched one after another, the company is expected to usher in a recovery in endogenous growth. We adjusted our profit forecast for the company. We expect the company's EPS for 2020-2022 to be 0.44, 0.53, and 0.67 yuan, respectively, and the corresponding PE for the stock price on May 11, 2020 to be 40, 33, and 26 times, respectively, maintaining the company's “prudent increase” rating.

Risk warning: risk of uncertainty about the progress of the epidemic; risk of product sales falling short of expectations; risk of competition; risk of new product development; risk of impairment of goodwill.