The 30 billion yuan chemiluminescence market has been monopolized by foreign capital for a long time. According to Deloitte's analysis, China's chemiluminescence market in 2022 exceeded 30 billion yuan, or 22% CAGR in 2017-2022. Due to the high chemiluminescence barrier (the instrument is a closed system), and the domestic market basically shows an import monopoly pattern: foreign-funded IVD companies such as Roche, Abbott, Beckman, and Siemens occupy more than 70% of the market size, domestic production share is less than 30%, and there is plenty of room for import substitution. Since its establishment in 1995, the company has been deeply involved in the chemiluminescence market for nearly 30 years. We believe that the company has now caught up with foreign brands in various dimensions such as instrument performance, detection speed, accuracy, and reagent richness, and has developed a core series of products such as chemiluminescence ultra-high speed machines, fully automatic biochemical analyzers, and intelligent assembly lines that meet the needs of the domestic market.

The instrument performance and reagent types are leading domestically. Anhui Gathering is expected to break through the foreign monopoly situation through its own and external advantages: 1) Instrument side: The performance of the company's high-speed X6, ultra-high-speed X8, and fully automatic biochemist C8 is at the leading level in the industry. The latest self-developed intelligent assembly line SATLARS T8 drastically shortens TAT, optimizes the inspection process, and fully integrates the five major fields of luminescence, biochemistry, molecules, electrolytes, and blood coagulation. 2) Reagent side: wide coverage and complete variety. Up to now, the company has obtained 181 chemiluminescence registration certificates (257 in total), covering testing fields such as tumor markers, thyroid, infectious diseases, gonadal and myocardial markers, inflammation monitoring, and bone metabolism. 3) The proportion of newly installed mainframes has increased, and the coverage rate of the top three hospitals has increased, leading to continuous reagent release: 24H1 added 796 new domestic installations, accounting for 75.13% of the installed large-scale machines, and the coverage rate of the top three hospitals reached 60.20%. 4) Collection accelerates the import substitution process.

In 2023, the Anhui Interprovincial Alliance collected five categories of infectious diseases, sugar metabolism, sex hormones, HCG, and beta-hCG. The company was selected in Group A and is the only 5A manufacturer in China. With the implementation of this collection and the normalization of future key varieties, we believe that the market share of the company's core projects such as tumor markers and thyroid will gradually replace the original foreign share, and the market share will further increase.

Deeply involved overseas for more than ten years, becoming the leader in chemiluminescence IVD overseas, the company has been deeply involved in overseas markets for more than ten years. The number of overseas instruments and new installations have surpassed the domestic market, and is a leader in chemiluminescence IVD overseas. The company's overseas business covers 155 countries and regions, and sells 10 chemiluminescence immunoanalyzers and 202 supporting reagents to the world (191 CE approved). Currently, the company has set up 10 wholly-owned overseas subsidiaries to accelerate localized operations and promote rapid business growth in key regions. In 2023, the company's overseas revenue has exceeded 1 billion yuan. 24H1 added 2,281 chemiluminescence instruments, and the sales share of medium and large luminescence instruments increased to 64.80%. We believe that the company's overseas business has higher potential for growth, and the company is expected to increase Snibe brand promotion and construction through localized operations and agent adjustments to achieve growth goals that continue to exceed domestic growth in the medium to long term.

Investment advice: give an “gain” rating

We expect the company's revenue for 2024-2026 to be 4.886/5.929/7.108 billion yuan, up 24.3%/19.9% year on year; net profit to mother will be 2.001/2.509/3.101 billion yuan, up 21.0%/25.4%/23.6% year on year; EPS in 2024-2026 will be 2.55/3.19/3.95 yuan, respectively, with PE multiples of 30/24/19x respectively. The company has fully benefited from domestic light collection and accelerated the domestic substitution process; overseas installations continued to break through, and entered the reagent harvesting period. Covered for the first time, a “gain” rating was given.

Risk warning

New installed capacity fell short of expectations, overseas expansion fell short of expectations, market competition increased risks, etc.