Performance summary: in 2021, the income reached 8.86 billion yuan (+ 25.33%), the net profit was 380 million yuan (+ 15.23%), and the non-return net profit was 371 million yuan (+ 14.92%).

Cash flow has improved significantly and profits have been affected by the epidemic. 1) in 2021, the company's gross profit margin was 26.97%, a decrease of 0.03pp compared with the same period last year. The decline in the company's gross profit margin was mainly due to the repeated impact of epidemic situations in Northeast and Southwest China in the second half of 2021. 2) the sales expense rate is 9.54%, the management expense rate is 4.49%, the financial expense rate is 3.29%, and the R & D expense rate is 1.38%. The increase in sales expense rate 0.47pp is mainly due to the company's after-sales service expenses in order to further improve after-sales service capacity, equipment commissioning and maintenance expenses, technical service fees and other after-sales service expenses are classified as sales expenses. The decline in management expense rate 0.67pp is mainly due to fine management inventory. The reduction of scrap rate, the decline of financial expense rate 0.13pp is mainly due to the diversification of financing channels, the decline of the comprehensive cost of capital after the ownership of state-owned assets, the increase of R & D expense rate 0.15pp, mainly due to the company's increased investment in the R & D of self-produced products. 3) the net cash flow generated by operating activities was 370 million yuan, an increase of 14.9% over the same period last year. The significant improvement in cash flow from operating activities is mainly due to the company's strengthening of national business integration and improving the efficiency of the use of funds.

With the steady progress of intensive / regional inspection center business, COVID-19 testing has brought rapid growth of ICL. The business income of intensive business / regional inspection center business reached 2.515 billion yuan, an increase of 20.52% over the same period last year. The number of contracted clients of 13 intensive / district inspection centers increased throughout the year, and the total number of cooperative hospitals reached about 391 at the end of the first half of the year. In 2021, income in East China accounted for 59%, with an increase of 25.6% over the same period last year, with a gross profit margin of 26%, an increase of 0.85pp. Northeast and North China have also achieved rapid growth under the influence of the epidemic, with income growth reaching 40% and 29.4% respectively. The company's two third-party laboratories, Zhongke Laboratory and Heilongjiang Longwei, achieved business income of 353 million yuan in 2021, an increase of 125.6% over the same period last year, mainly due to the performance increment brought about by the new crown nucleic acid testing business and the rapid recovery of conventional testing business.

Industry has benefited from the rapid growth of industrial integration. The industrial sector, including IVD product development and production business and medical information business, achieved operating income of 502 million yuan, an increase of 21.19% over the same period last year. It mainly benefits from the expansion of the sales channels of the company's own brand business and the synergy of the existing intensive and regional inspection business, which drives the growth of business income in the industrial sector. The company continues to increase investment in R & D of its own products, with R & D investment of 120 million yuan in 2021, an increase of 40.9% over the same period last year. Under the condition of consolidating the domestic leading level of products such as saccharification and quality control, the company continues to make new breakthroughs in clinical mass spectrometers, digital inspection information systems and other product fields. In the field of precision detection, in 2021, we launched our own triple quadrupole clinical mass spectrometer and a new generation of glycosylated hemoglobin analyzer MQ-8000. In the field of digital inspection information products, in 2021, the company launched an innovative product: Runda Huijian-artificial intelligence interpretation test report system, which provides intelligent interpretation test report service for B-end medical institutions and C-end patients. We expect that the income of the industrial sector in the next 2-3 years is expected to benefit from industrial integration and is expected to exceed 1 billion yuan in sales.

Profit forecast and investment advice. It is estimated that the EPS from 2022 to 2024 is 0.84,1.13,1.50 yuan respectively. In view of the rapid expansion of intensive / regional inspection centers, the "buy" rating is maintained.

Risk tips: research and development is not as expected; the company's intensive and regional inspection center business is not as expected; the risk of repeated fluctuations of the epidemic.