Focusing on medical polymer consumables for nearly 40 years, it is an important link in the global industrial chain. Established in 1985, Gongdong Medical focuses on R&D, production and sales of medical polymer consumables. Currently, it has formed 5 types of products, including experimental testing, vacuum blood collection systems, body fluid collection, pharmaceutical packaging, and medical care. The product quality and production system have been recognized by world-renowned pharmaceutical companies such as McKesson, Medline, and IDEXX. With the gradual release of domestic and foreign production capacity, it is expected to play a more important role in the global industrial chain of consumables in the medical, life sciences, and animal fields.
With the acquisition of TPI in the US, the global production capacity layout was further advanced. In 2022, through technical reform and upgrading, the company increased production of vacuum blood collection vessels and pharmaceutical packaging materials by 22.5% and 14.7% respectively, and continued to expand production capacity through mergers and acquisitions, land auctions, and cooperative construction. In 2023, the company increased the capital of the US subsidiary Gd Medical with 45 million US dollars to acquire the core assets of TradeMarkPlastics Inc. (“TPI Company”). The main products have strong synergy with Gongdong's original business, made important additions on the channel side, and the overseas production capacity layout is beginning to emerge, providing strong support for long-term local marketing in the US and laying the foundation for the company to become a global core supplier of medical polymers.
Closed IVD cooperation continues to break through, and pharmaceutical packaging materials expand the scope of business. The company's revenue in the laboratory testing and body fluid collection business in 2023 was 347 million and 150 million, respectively. Compared with 2019, the year-on-year increase reached 57.59% and 154.04%, respectively. The core products are growing rapidly, and it is expected that the production line will continue to grow as catalysts such as breakthroughs in performance verification of core customers and relief of inventory pressure from overseas customers. The pharmaceutical packaging business continues to enrich the company's product types, expand its business margins, and continue to explore ophthalmology consumables, weight loss consumables, etc., and production lines are expected to maintain rapid growth.
Profit forecasting and valuation. We expect the company's total revenue for 2024-2026 to be 1,401.01, 18.22, and 2.369 billion yuan respectively, with growth rates of 43.66%, 30.05%, and 30.01% respectively; net profit to mother for 2024-2026 will be 2.65, 3.53, and 464 million yuan, respectively, with growth rates of 143.00%, 33.18%, and 31.39% respectively. The PE corresponding to the current stock price is 21x, 15x, and 12x, respectively. Weili Medical, Jet Biotech, and Adopt Co., which are also in the low-value consumables industry, were selected as comparable companies. Based on the company's intensive cultivation of medical polymer consumables, the product strength was recognized by downstream users. Various collaborations continued to be deepened, covered for the first time, and given a “buy” rating.
Risk warning. Production capacity release falls short of expectations, domestic policy risks, and overseas business expansion falls short of expectations.