Investment logic:
Adhere to cutting-edge exploration and independent innovation, and build a platform-based IVD enterprise with chemiluminescence as the core. Yahuilong is a scarce domestic leading enterprise that has always insisted on exploration and independent innovation in the IVD frontier. The self-developed magnetic particulate acridine ester chemiluminescence technology platform has advantages such as high sensitivity and stable results compared to traditional luminescence technology. It has first broken the monopoly of Abbott, Siemens, etc. in this field, and has gradually built six major technology platforms including immunofluorescence chromatography, enzymatic immunofluorescence, and colloidal gold chromatography. It has developed six major technology platforms including immunofluorescence chromatography, indirect immunofluorescence, and colloidal gold chromatography. Among them, the high-end chemiluminescence instrument iFlash The 3000G/9000 has caught up with international leaders in terms of technology path and detection speed, and the number of chemiluminescence reagents approved by the company has reached 157, ranking second in the industry.
Deepen the autoimmune diagnosis business, and the differentiated layout accelerates terminal coverage. The company has the most comprehensive self-immune diagnosis menu and is the first to complete chemiluminescence iterations. The market share has reached 18%, ranking second, and is expected to continue to grow in the future. In addition, the company differentiates and lays out special screening programs for diabetes, reproductive, respiratory, and cardiac markers to provide comprehensive solutions to create brand characteristics and accelerate penetration into the Blue Ocean market. The company is deepening the strategy of “special admission and routine dosage” to promote the increase in installed and owned chemiluminescence instruments, thereby driving the release of reagents and consumables. As of Q3 2023, the coverage rate of the company's top three hospitals reached 65.56%, with a cumulative total of 7,860 units installed; benefiting from this, the company's non-COVID-19 self-produced chemiluminescence business is expected to achieve revenue of 1,167 billion yuan (+49.89%) in 2023, and the overall non-COVID-19 self-produced business is expected to achieve revenue of 1,324 billion yuan (+46.46%). At present, China's self-exempt diagnosis market has exceeded 2 billion yuan, and the cardiac testing market has also exceeded 6 billion yuan. With the acceleration of chemiluminescence iterations and domestic substitution, the company's first-mover advantage will gradually become prominent. It is expected that through continuous academic promotion, it will increase the penetration rate of testing, accelerate the release of innovative products, and seize market share.
Actively explore international markets, deepen overseas cooperation, and accelerate the overseas launch of self-produced products. In the context of the normalization of domestic IVD collection, the company “kept the right balance”, seizing collection opportunities to accelerate the admission of domestic products while deepening international cooperation. The business has covered more than 100 countries and regions. The 2023H1 overseas self-production business revenue has reached 67 million yuan (+62.11%), and added more than 400 new chemiluminescence devices (+34%). In addition, the company has deepened cooperation with Japan's MBL in advantageous fields such as self-prevention, heart disease, and diabetes, using its brand and channel power to expand the East Asian and global markets, and steadily promote localization. In February 2023, the company's Saudi service center was officially launched, and service networks in India, Latin America and other places are already being prepared. International competitiveness continues to improve, and new projects and products are going overseas at an accelerated pace.
Profit forecast and investment suggestions: As a leading domestic enterprise in the field of self-immunity and chemiluminescence in vitro diagnosis, the company's holdings of chemiluminescence instruments and assembly lines continue to grow. At the same time, the company's advantageous and characteristic projects collaborate with routine project testing reagents to accelerate hospital delivery and improve instrument yield efficiency. In addition, the international market is steadily developing, so we are optimistic about the company's domestic and international performance. In 2023, the company achieved revenue of 2,043 billion yuan, a year-on-year decrease of 48.69%, and net profit of 358 million yuan, a year-on-year decrease of 64.60%. We expect total revenue from 2024-2025 to be 21.76/2,822 million yuan, up 6.55%/29.68% year on year; net profit to mother of 487/662 million yuan, up 35.92%/35.91% year on year, corresponding PE was 39/29/21 times, maintaining the “recommended” rating.
Risk warning: Product development falls short of expectations, market competition intensifies, collection and implementation falls short of expectations, domestic and foreign market expansion falls short of expectations, risk of fluctuations in upstream raw material supply, risk of changes in industry policies, etc.