Key points of investment

Recently, the company released its 2020 semi-annual report. During the reporting period, the company achieved operating income of 1,460 million yuan (+29.88%); the net profit of the mother was 193 million yuan (38.82%); and net profit of the non-return mother was 187 million yuan (+42.75%).

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 0.62, 0.58, and 0.70 yuan, respectively, and the closing price on August 28, 2020 corresponding to PE 33.63, 36.22, and 29.61 times, respectively, maintaining the “prudent increase in holdings” 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.