Incident: Shengxiang Biotech revealed the 2024 mid-year report forecast, with estimated revenue of 0.71 billion yuan (yoy +66%, same below), estimated net profit of 0.15-0.165 billion yuan (yoy +64% to 80%), net profit not attributable to mother 0.12-0.13 billion yuan (yoy +285% to 317%), with impressive results.
Multiple pathogens have reduced overall seasonality, and joint respiratory testing products have broken through. The share of influenza-like cases in week 31 (ILI%) data from the National Influenza Center showed that the southern region of the country was 4.2%, the same as the same period in 2023, higher than the same period of 2021-2022 (3.3%, 4.1%); ILI% in northern China was 3.8%, higher than the same period in 2021-2023 (2.3%, 2.5%, 2.7%); globally, influenza is high in the southern hemisphere, South America, Oceania, and East Africa, while COVID-19 activity is rising in Central America, the Caribbean, Southwest Europe, and Southeast Asia. In the field of respiratory diseases, the company has formed a matrix of more than 60 products, covering single tests, multiple tests, drug resistance genes, pathogen sequencing, etc. In 2023, production line revenue exceeded 0.4 billion yuan, a year-on-year increase of 680%, providing strong support for the company's rapid growth, and is expected to play a more important role in testing for various respiratory pathogens.
Procurement promotes an increase in the market share of HPV projects. In 2023, Anhui Province led the collection of in vitro diagnostic reagents, and Shengxiang's brand power was realized in an orderly manner. Among the 16+18 and other subtypes with the highest demand, Shengxiang reported 12.2%, ranking in the top three in Group A. Compared with before collection, HPV is currently second only to respiratory testing among the company's reagents. Through collection, Shengxiang is expected to further increase its market share and further consolidate revenue contributions.
Intensive overseas cultivation has created a second growth curve. The company has long positioned itself as a global leader in molecular diagnostics. Its products have been sold to more than 160 countries and regions around the world. It has set up overseas subsidiaries such as Indonesia, France, the United Kingdom, the Philippines, and the United States, as well as local offices in Thailand and Saudi Arabia, further focusing on key countries. The company's blood screen nucleic acid test kit has been approved by the European Union CE List A and HPV13+2 nucleic acid has passed CE IVDR certification, demonstrating the company's excellent product strength and long-term strength in global competition.
Profit forecasting and valuation. We expect the company's total revenue for 2024-2026 to be 1.56/2.135/2.733 billion yuan, with growth rates of 54.94%/36.82%/28.03%, respectively; net profit to mother for 2024-2026 will be 0.33/0.456/0.602 billion yuan, respectively, with growth rates of -9.19%/38.00%/32.09%, respectively. The PE corresponding to the current stock price is 34x, 24x, and 18x, respectively. Ed Biotech and Capbio were selected as comparable companies. The average PE of the comparable company in 2024 was 31 times. Based on the completion of the company's molecular product layout, the penetration rate of respiratory products continues to increase. First coverage, giving a “buy” rating.
Risk warning. Domestic policy risks, risks of new product promotion falling short of expectations, overseas promotion risks.