Pharmaceutical innovation drives the development of upstream enterprises, and overseas markets are vast. Global pharmaceutical upstream leader Xianfa has completed comprehensive coverage of upstream pharmaceutical products. With rich product categories, excellent performance, and perfect echelon layout, Thermo Fly's external headquarters (US) revenue in the first three quarters of 2013 to 2022 was 47~ 52%. From 2014 to 2021, Sartorius accounted for 50 to 60% of revenue outside the region where its headquarters was located (Asia, Europe, and Africa). The regional distribution of the revenue of the two companies is in line with global drug use demand, setting a benchmark for the international market strategic goals of upstream pharmaceutical companies in China.
Benefiting from the relative prosperity of downstream demand, the domestic and foreign production equipment market for biological products and complex preparations is growing faster than the overall pharmaceutical equipment market. Upstream domestic pharmaceutical manufacturers recently invested in research on biological products and complex formulations. Currently, the domestic market is mainly occupied by foreign investment, and domestic upstream manufacturers are expected to usher in a broad domestic replacement space after being verified by more customers.
Dongfulong: Building a freeze-dried moat, biotechnology+CGT+ consumables are expected to contribute elasticity.
1) The company's market share of freeze-drying equipment in China increased steadily from 19.02% to 22.01% in 2007-2009, and has grown to more than 50% in 2021, making it the largest freeze-drying machine manufacturer in China for many years. Freeze-drying technology is gradually being promoted in the fields of small-molecule injectable drugs, Chinese herbal medicine, veterinary medicine, key protection products, diagnostic reagents, beauty and skin care, etc. The company is expected to maintain rapid development in domestic and foreign markets in the future with industry popularity.
2) The company won a large number of COVID-19 vaccine-related orders with convenient customization and timely delivery, quickly proving to the industry its strength in the upstream and midstream processes of biopharmaceuticals. The bioreactors and chromatography systems required for biological product production are recognized as directly affecting systems in ISPE guidelines and need to be tested and verified before official use. Their successful passage must be based on early user demand communication and mid-term manufacturer on-demand manufacturing. It takes a long time to accumulate cases in regular years. The COVID-19 vaccine project can accelerate the company's development in the entire field of bioengineering.
3) The company laid out the CGT field as early as 2015. As of the end of the first quarter of 2022, the orders in hand involved 127 million yuan for cell preparation sites, 31 million yuan for cell expansion systems, 13 million yuan for honeycomb incubators, and 08 billion yuan for liquid nitrogen storage systems. The company's business sector has developed in a comprehensive and balanced manner. Recently, the company has rapidly established cooperation with a number of specialized downstream companies. The customer base has covered industry leaders such as Metabio, Eucardy, and Cell Therapy Group, and the business is rapidly expanding
4) The company formed a complete consumables program for disposable bags, reagents, fillers, filters, and hard packaging materials in 2021, and has continued to improve the product matrix richness since then. Head-to-head tests have shown that some of the company's media and filler products can benchmark imported products in terms of key parameters.
Profit forecast and rating: We expect the company's net profit in 2023/2024/2025 to be 883/10.32/1,206 billion yuan, respectively, an increase of 4.28/16.92/16.82% over the previous year. The company's reasonable market value in 2024 is 17.2 billion yuan, corresponding to 20.8% of the space, covering 20.8% for the first time, giving it a “buy rating”
Risk warning: Market competition facing new businesses; R&D progress falls short of expectations; overseas market expansion is affected by changes in international political relations