Investment summary: 1) biochemical reagent business starts, overseas giants join forces to achieve solid cornerstone business; 2) expand layout pathology + hemagglutination segment high growth market, with the help of Chinese medicine platform to build IVD national team; 3) business expansion, product going out to sea, continuous optimization of management, multi-dimensional Chinese medicine can help enter a new chapter of development.

Biochemical reagent business started, with the help of Chinese medicine platform to build IVD national team: the company was founded in 2001, started with biochemical diagnosis business, with its own brand "Kingsle" brand accumulated for many years to achieve good market reputation and industry status. Under the guidance of the development strategy of "working closely with giants and leading companies in the industry", the company signed strategic cooperation agreements with international IVD giants Abbott Laboratories and Roche as early as 2013 and 2016 to enter the big-name manufacturers to close the system and take advantage of the IVD global market. In 2020, the company introduced national pharmaceutical investment by state-owned shareholders, and its performance continued to grow steadily under the double blessing of large platform channels and industrial resources. in 2021, the income of biochemical sector has reached 943 million yuan, which has become a solid cornerstone business of the company. In 2022, the company's operating income and return net profit reached 1.511 billion yuan and 389 million yuan respectively, and a new round of growth began.

Expand the layout pathology + hemagglutination subdivision high growth market, platform-type IVD enterprises take shape. The main results are as follows: 1) the development rate of hemagglutination test in China needs to be improved, imports occupy the core high-end market share, and there is a broad space for domestic substitution. In 2017, the company acquired Meituang Blood Coagulation and officially entered the blood coagulation market. In 2021, Midea Innovation achieved a business income of 54.6 million yuan. The company's blood coagulation products have achieved a breakthrough in the key technology of blood coagulation, and the new high-speed automatic coagulation instrument MDC7500 was launched in March 2022 to open the domestic high-end market; in June 23, Anhui coagulation reagent collection and coagulation collection all won the bid in Anhui collection, continuously demonstrating strong product power; 2) the high incidence of tumor promotes the broad demand for pathological diagnosis, and the domestic accelerates to break through the technical barrier. In 2020, the company cooperated with Sinopharmaceuticals to complete the acquisition of domestic pathological diagnosis leader, the product strength is comparable to the international advanced level, the fully automatic immunohistochemical staining system Titan series with completely independent intellectual property rights, the product system of first and second antibodies and other immunohistochemical reagents are rich, the quality is comparable to the international advanced level, and gradually realize domestic substitution. From 2019 to 2021, the revenue of Maixin Biology was 432 million yuan, 473 million yuan and 601 million yuan respectively, with a growth rate of 28.68%, 9.35% and 27.12% respectively, providing a stable revenue contribution, and the formation of platform-based IVD enterprises broadened the company's revenue boundary.

Chinese medicine enabling business to broaden + products to go out to sea, help to enter a new chapter of development. Since the company introduced Sinopharmaceutical Investment as a strategic investor in December 2019, as of July 2023, China Pharmaceutical Investment has held 16.63% of the shares in the company, making it the largest shareholder of the company. Sinopharmaceutical Group's own channel + sales channel is rich in resources, with 8 tertiary hospitals and 30 secondary hospitals throughout the country, which is expected to enhance the penetration of the top nine organisms in the field of IVD instruments in secondary and above hospitals; at the same time, enrich industrial resources to help the company speed up the layout of the new track. On September 6, 2023, Mr. Wang Xiaoya, the new director of Maixin Biology, was the candidate for the board of directors of the company, and the management composition of the company continued to be optimized.

After the Chinese medicine enters the owner, the multi-dimensional empowering company opens a new chapter of growth.

Profit forecast and valuation: the company started with biochemistry, traditional Chinese medicine can expand the business + products go out to sea to open the growth ceiling. We select Mindray Medical, New Industry and Antu Biology, which are in the same industry of in vitro diagnosis, as the valuation of the comparable company, considering that the company is expected to usher in the accelerated development stage after the ownership of Chinese medicine, with high potential space, give the company a certain valuation premium. We estimate that the company's revenue from 2023 to 2025 will be 1.74 billion yuan, an increase of 18%, 20% and 20% respectively over the same period last year; the net profit of returning home will be RMB 810 million, an increase of 32.5%, 27.8% and 23.6% respectively over the same period last year; corresponding to the PE of 23, 18 and 14 times, the company will be given a "Buy" rating for the first time.

Risk hints: the winning bid for collective mining is not as expected; the risk of deterioration of the competition pattern; and the overall growth rate of the industry is lower than expected.