We are deeply involved in in vitro diagnosis (IVD), and our operational capacity continues to improve. Founded in 2010, Shuoshi has continued to consolidate its main advantages in molecular diagnostics over the years, while making efforts in POCT and other fields, and actively exploring overseas markets, forming a rich layout of over 600 products. 2024H1, influenced by the implementation of policies such as collection, etc., the company achieved revenue of 0.18 billion yuan (-4.9% year over year), excluding the impact of COVID-19 business, regular business increased 2.0% year on year; achieved net profit of 29.24 million yuan (+143% year over year), turning a loss into a profit. By product, diagnostic reagents are the company's main source of revenue (2024H1 accounts for 90.2%). At the same time, 2024H1's gross margin reached 68.1%, and the company's fee control improved markedly, and the net margin increased to 16.5%.

The IVD industry is growing steadily, and the company's core technical advantages are remarkable. According to the forecast of the China Business Industry Research Institute, the domestic IVD market is expected to grow from 71.6 billion yuan in 2019 to 133.2 billion yuan in 2024, with a CAGR of 13.2%. Among them, the molecular diagnostics market is expected to reach 25.8 billion yuan in 2024. The company has now established five major technology platforms, including multiple fluorescence quantitative PCR and NGS. It is worth noting that the company pioneered multiple fluorescence quantitative PCR testing in China and constituted a key technical advantage. At the same time, the Shuoshi Vaginal Microecology Evaluation System is already the brand with the largest market share in the domestic market, establishing a leading position in the segment.

Focus on maternal and child health & infectious disease testing, multi-business collaborative development. First, the company is a major supplier of nucleic acid testing products in the field of infectious diseases in China. On the basis of conventional products, the company is also actively developing new technologies.

24H1's SIC-1000 fully automatic dry immune analyzer was approved for marketing; secondly, in the field of maternal and child health, the company's HPV test reagents use fluorescence PCR testing, leading technology. Since 2016, the company has become an important supplier of HPV detection reagents for the “Two Cancers Screening” project in Taizhou, Jiangsu and other regions. Furthermore, in order to effectively develop overseas markets, the company has branches in Hong Kong, the United Kingdom, the United States and other regions. In 2024, the monkeypox epidemic spread rapidly in Africa and other places. The company actively deployed monkeypox tests and received many international recognitions.

We forecast the company's 24-26 EPS to be 1.07/1.68/2.26 yuan, respectively. The company is a technology-leading IVD enterprise in China. It has outstanding advantages in molecular diagnostics, and is actively deployed in the POCT field and overseas markets. Considering that the impact of COVID-19 has subsided, the company's regular business revenue is in the initial initial phase. We adopted the DCF valuation method, with a target price of 86.57 yuan, giving it an “increase in wealth” rating for the first time.

Risk warning

Sales and product promotion expectations are low; product development progress falls short of expectations; risk of price decline due to volume procurement, etc.; risk of cost investment exceeding expectations; risk of asset and credit impairment loss.