Matters:
Company announcement, US subsidiary “WONDFO USA CO. “, LTD.” Welllife COVID-19/influenza A&Btest, a trifecta test kit for the novel coronavirus, influenza A virus, and influenza B virus, has obtained emergency use authorization (EUA) from the FDA. The company's approved respiratory triad test product qualitatively tests and distinguishes influenza A and B virus or the novel coronavirus from anterior nasal samples within 5 days of respiratory infectious disease, and is for Point of Car (POC) professional use.
Commentary:
The US respiratory trifecta market is vast. According to US CDC data, the number of COVID-19 patients admitted to the US peaked in the fall and winter of 2023, and then entered a wave-like recurrent epidemic pattern. Influenza, on the other hand, shows a pattern of seasonal transmission, and a large number of infected people appear every year. Respiratory triple screening products will allow patients with respiratory infectious diseases to be diagnosed quickly, and due to long-term seasonal outbreaks of influenza A and B, the market demand for triple screening products may be more stable compared to individual COVID-19 testing products. According to CDC and WHO data, a total of 135 million people were infected with COVID-19 and influenza in the US in 2023. Assuming that the penetration rate of the triple joint test can reach 45%, we expect the potential market size of the US respiratory triple test to reach more than 500 million US dollars.
This approval is expected to accelerate the company's expansion in the US hospital market. The company's respiratory triple test products have been approved for POC professional use, which means that the company can sell its respiratory triple screening products in professional scenarios such as hospitals and professional testing institutions in the US market. The company has deep roots in the US market and established the American subsidiary “WONDFO USA CO., as early as 2009. “, LTD” is responsible for the American market and has made preparations for in-hospital sales team building and in-hospital channel promotion in the US. We believe that as the company's respiratory triple test products are certified by the FDA, the company's expansion in the US hospital market is expected to accelerate.
The company continues to enrich its product line layout in the US. In the US market, in the past, the company mainly focused on drug testing products on colloidal gold platforms, supplemented by pregnancy testing products, but the layout of infectious disease products was relatively small. After the company's respiratory trifecta was approved by the FDA, the company's infectious disease testing product layout in the US region was enriched, which helped to further meet the demand for testing products in the context of the high incidence of seasonal respiratory infectious diseases in the US. In the future, the company plans to further introduce fluorescence platforms into the US market to meet the needs of a wide range of primary care institutions in the US for fluorescence platform instruments and reagents.
Investment advice: We keep our profit forecast unchanged. The company's net profit for 24-26 is 6.5, 8.5 billion yuan, and 1.09 billion yuan, respectively, with year-on-year growth rates of +33.8%, 30.5%, and +27.5%, respectively. EPS is 1.38, 1.80, and 2.30 yuan, respectively, and the corresponding PE is 19, 14, and 11 times, respectively. According to DCF model estimates, the company was given an overall valuation of 17.7 billion yuan, corresponding to a target price of about 37 yuan, maintaining a “recommended” rating.
Risk warning. 1. Regular business revenue falls short of expectations; 2. The volume of new technology platforms such as chemiluminescence falls short of expectations.