Key points of investment:
Beijing Jiuqiang Biotechnology Co., Ltd. was founded in 2001. It is a national high-tech enterprise whose main business is R&D, production and sales of in vitro diagnostic products. It has a series of in vitro diagnostic products that are developing simultaneously with the international community, and was successfully listed on GEM in 2014. The company currently has biochemical testing systems, blood clotting testing systems, luminescence detection systems, blood type testing systems, POCT testing systems, pathological testing systems, and liquid biopsy CTC. In 2020, Sinopharm invested in Jiujiang Biotech to jointly lay out the field of in vitro diagnosis of medical devices. Today, Jiuqiang Biotech has grown into one of the leaders in the in-vitro diagnostic industry in China, and the company is providing better products and services to users around the world through continuous efforts.
The company's revenue CAGR reached 17.6% in the past 5 years, and the CAGR of net profit to mother reached 11.7%. The company has maintained steady growth in recent years. Operating revenue increased from 774 million yuan in 2018 to 1,742 million yuan in 2023, 5-year CAGR of 17.60%, net profit to mother increased from 301 million yuan in 2018 to 524 million yuan in 2023, and a 5-year CAGR of 11.74%.
At the end of 2023, Sinopharm Investment held 16.63% of Jiujiang Biotech's shares as the largest shareholder. Sinopharm's capital investment and strategic cooperation agreements are conducive to promoting the sales and development of the top nine biochemical in vitro diagnostic reagents, thereby consolidating and improving the market position in biochemical in vitro diagnostic reagents, which is in line with the company's development strategy and has a positive impact on subsequent business performance.
In the Liver Gong Biochemical Collection Segmentation Project, all 46 bidding projects in which Jiujiang Biotech participated won the bid. Among them, the total protein project ranked first, and maintained the second ranking in the leucinyl aminopeptidase, lactate dehydrogenase, and glutathione reductase projects. The company will actively seize the opportunities brought by collection, which will further increase its market share and increase sales volume.
Profit forecast. We expect the company's 24-26 EPS to be 1.05, 1.28, and 1.46 yuan, respectively, and net profit growth rates of 18.2%, 21.2%, and 14.8%, respectively. Referring to comparable company valuations and considering the company's high prosperity and leading position in the IVD industry, we gave the company 17-22 times PE in 2024, corresponding to a reasonable value range of 17.89-23.15 yuan, and gave it a “superior to the market” rating.
Risk warning. Risk of valuation fluctuations, collection price reductions falling short of expectations, subsidiary development falling short of expectations, etc.