Main points of investment:
IVD complete product line, systematic layout to improve core competitiveness Mike Biology was founded in 1994, is an integrated enterprise of R & D, manufacturing and production in the field of in vitro diagnosis (IVD). The products cover eight major fields, such as biochemistry, immunity, blood cells and so on. A number of new products will be launched intensively in 2023, which is expected to accelerate growth.
The new chemiluminescence equipment + pipeline is expected to drive the release of reagents.
Chemiluminescence reagent is one of the most important products of the company. According to the data of China Medical device Blue Book, the market space of China's chemiluminescence industry is expected to grow from 39.4 billion yuan in 2022 to 63.3 billion yuan in 2025, with a compound annual growth rate of 17.09%. At present, imports account for about 75%, and there is more room for domestic substitution. As a major player in the industry, the company is expected to enjoy the dividend of the rapid development of the industry. In 2023, the company launched i800 new products, while the domestic self-developed assembly line LABAS MAX has also been listed one after another, or will lead the domestic substitution by virtue of the advantage of performance-to-price ratio, the release of reagents usually lags behind 3-6 months, and the new equipment + assembly line products are expected to drive the growth of reagents in 2023.
The divestiture of agency business is accelerated and the company's profitability continues to improve.
2023H1's self-produced business accounts for 62.76%, and agency business accounts for 35.92%. Since 2019, strategic adjustment has been carried out to accelerate the divestiture of agency business. The company's revenue share of agency business has dropped from 61.21% in 2019 to 35.92% of H1 in 2023. Cash flow is expected to improve, profitability continues to improve. The impact of COVID-19 's testing business gradually faded in 2022, and the decline in revenue from the agency business put short-term pressure on the company's revenue growth. with the further increase in the proportion of independent products, the company is expected to usher in an inflection point in 2023.
Earnings forecast, valuation and rating
We estimate that the company's operating income from 2023 to 2025 will be RMB 31.25 million, with a growth rate of-13.40%, 6.54%, 7.38%, 493%, 631, 778 million, and-30.3%, 27.93%, 23.25%, 1.27 per share and 3.19%, respectively, respectively. The value per share measured by the absolute valuation method is 21.43 yuan, which is 17 times higher than the average PE of the company in 2024. In view of the complete layout of the company's IVD product line and the accelerated divestiture of the low gross margin agency business, the proportion of self-produced business sales continues to increase, and profitability continues to improve. Combining the absolute valuation method and the relative valuation method, we give the company 21.2 times PE in 24 years, with a target price of 21.85 yuan, maintaining a "buy" rating.
Risk hint: domestic regional collection risk; product promotion is not as expected; policy landing is not as expected