AB Le-funded _s joined UM, AR helps Y] Liwei Guang Biotech takes off

Founded in 1985, Weiguang Biotech has always focused on the field of blood products. It has developed into a leading domestic blood products enterprise with high comprehensive plasma utilization rate, complete product range, and strong R&D strength. Currently, the company's main products are divided into three categories: human blood albumin, immunoglobulin, and coagulation factors, including human blood albumin, intravenous human immunoglobulin, etc., with a total of 11 varieties and 23 specifications, covering a wide range of clinical needs; the revenue ratio of various products is basically stable. Human blood albumin and intravenous human immunoglobulin are the company's main revenue sources, accounting for more than 70% of the company's revenue.

Sinopharm Group will become the actual controller of Weiguang Biotech. On June 2, 2023, the Shenzhen Guangming District State-owned Assets Administration Bureau and China Biotechnology Co., Ltd. reached an agreement to jointly establish a joint venture to hold most of Weiguang Biotech's shares. After Sinopharm Group enters the market, Weiguang Biotech is expected to receive more resources and support to further enhance its competitiveness and innovation capabilities in the biomedical field. With the intervention of state-owned assets, the company's capabilities in R&D, production and market expansion are expected to increase significantly.

Performance continues to grow, and the development trend is encouraging

The company's revenue increased from 0.623 billion yuan in 2017 to 1.048 billion yuan in 2023, with a CAGR of 9.05%, and the company's revenue increased significantly; net profit to mother increased from 0.155 billion yuan in 2017 to 0.218 billion yuan in 2023, with a CAGR of 5.85%. Net profit to mother was 0.047 billion yuan in the first quarter of 2024, up 2.40% year on year. Net profit growth in the first quarter slowed down. Net profit after deducting non-return net profit was 0.046 billion yuan, up 1.23% year on year. The increase after deducting non-net profit was small, and the company's dependence on non-recurring income decreased.

The company's blood products business revenue accounts for about 80% of total revenue, growing from 0.614 billion yuan in 2017 to 0.985 billion yuan in 2023, with a CAGR of 8.20%. In 2023, the company's tonne slurry revenue reached 1.905 million/ton, and the blood products business revenue grew rapidly; gross profit increased from 0.269 billion yuan in 2017 to 0.401 billion yuan in 2023, with a CAGR of 6.88%, gross profit per ton of pulp At 0.7766 million yuan/ton, the company has achieved remarkable results in cost control and profit improvement. In the long run, the company's blood products business still has room for development, and the prospects are positive.

In 2023, human albumin revenue was 0.398 billion yuan, up 54.52% year on year, with a significant increase in revenue; gross profit was 0.146 billion yuan, up 79.08% year on year; gross margin was 36.67%.

In 2023, the operating income of intravenous human immunoglobulin was 0.375 billion yuan, up 56.76% year on year, and revenue grew rapidly; gross profit was 0.133 billion yuan, up 125.57% year on year. The doubling of gross profit showed the high profit potential and market popularity of intravenous human immunoglobulin, with a gross margin of 35.58%.

Endogenous and extrinsic activities go hand in hand to continuously inject development momentum

The company currently has 9 wholly-owned or controlled single plasma collection stations, and the average plasma collection volume of plasma stations is in a leading position in the industry. In 2023, the company collected about 517 tons of pulp, an increase of 10.71% year-on-year.

Ping Fruit Pulp Station is the largest pulp station under Weiguang Biotech. It has an excellent pulp donation culture and a high level of operation management. The company increases the recognition and frequency of pulp donation through publicity and education, and uses advanced management systems and high-quality services to significantly increase the amount and frequency of pulp collection, providing the company with stable plasma resources.

The company attaches importance to product research and development. In 2023, the company's human coagulation factor VIII successfully obtained the “Drug Registration Certificate”, and in May 2024, the human prothrombin complex obtained the “Drug Registration Certificate”, and other research projects are progressing steadily. The novel intravenous human immunoglobulin is expected to be enrolled in phase III clinical trials; the human fibrin binder is expected to begin clinical trial research. The new product project is expected to further enrich the company's product range and have a positive impact on the company's performance after the product is launched.

Investment advice

We expect the company's revenue for 2024-2026 to be 1.149/1.308/1.478 billion yuan, up 9.6%/13.9%/13.0% year on year, and net profit to mother is 0.236/0.267/0.304 billion yuan, respectively, up 7.8%/13.2%/14.0% year on year, respectively, and corresponding valuations are 26X/23X/20X. First coverage, giving a “buy” investment rating.

Risk warning

Risk of insufficient supply of raw plasma; risk of developing new products; potential safety risks of products; increased risk of market competition.