Investment logic

The company takes “precision medicine” as the core and deepens the development of the entire industry chain. The company's main business includes preparation and storage of cell tests in the field of “precision prevention”; research, production and marketing of in vitro diagnostic materials, in vitro diagnostic reagents and devices in the field of “accurate diagnosis”, scientific research reagent products such as biological genes, proteins, antibodies, etc., and genetic testing services; research and development of clinical applications of stem cells and immune cells in the field of “cell therapy”; forming a “precision medicine” industry chain. In the field of accurate diagnosis, Zhongshan Jinqiao Company, a subsidiary of Shanghai Aoyuan, is mainly responsible for the expansion of the company's pathological diagnosis business. The products cover the fields of tumor diagnosis, cardiovascular disease diagnosis, autoimmune disease testing, allergen testing, drug testing, etc. In 2023, it will also launch a new generation of fully automatic immunohistochemistry equipment Ultra 60 Plus. With the continuous increase in partner hospitals and the promotion of the use of immunohistochemical dyeing machines that match the company's pathological diagnostic reagents, the increase in the number of installed machines has driven the rapid growth of the pathological diagnosis business and has become an important part of the company Sources of revenue and profits. In 2023, Shanghai Aoyuan achieved revenue of 0.897 billion yuan (YoY +10.47%) and net profit of 0.236 billion yuan (YoY +26.20%), with very steady growth.

The stem cell market is rapidly expanding, and the company is increasing R&D and actively laying out the field of cell therapy. The global stem cell therapy market is growing at an extremely rapid pace due to increased demand for regenerative medicine and research funding. According to Dimension Market Research data, the global stem cell therapy market will surge from $18.9 billion in 2024 to $54.7 billion in 2033, with a CAGR of 12.6% for 2024-2033E. Furthermore, in recent years, various policy documents clearly support the development of innovative stem cell drugs, continue to strengthen the supervision and enforcement of stem cell technology, and promote the standardization and standardized development of stem cell technology. According to data from the Forward-looking Industry Research Institute, the number of applications accepted for stem cell drugs IND in China has increased rapidly in recent years, reaching 52 cases in 2023, far higher than the 5 cases in 2018. After the country clarified the stem cell drug declaration route in 2018, up to now, 8 indications of the VUM02 injection (human umbilical cord stem stem cell/matrix cell injection) independently developed by the company have obtained the “Drug Clinical Trial Approval Notice” approved and issued by the State Drug Administration, including decompensated liver cirrhosis, idiopathic pulmonary fibrosis, slow acute (subacute) liver failure, moderate/severe acute respiratory distress syndrome. The clinical classification is severe or severe acute phytomigration with severe severe novel coronavirus infection and hormone failure The main disease, systemic sclerosis, Severe ulcerative colitis in the active phase; some have entered clinical phase II/III. Furthermore, the drug “human endodontic mesenchymal stem cell injection” jointly declared by the company's shareholding company Beijing Sanli Heze Biotechnology Co., Ltd. and Capital Medical University is the first stem cell drug used in the treatment of diseases such as chronic periodontitis in China. It has now entered phase II clinical trials and patients have enrolled, and the leading position is obvious.

Profit forecast: The company's pathological diagnosis business is growing steadily, the adult cell storage business is contributing new volume, and the fundamentals are stable; investment in R&D continues to increase, and the medium- to long-term market space for innovative stem cell drugs is considerable. In 2024-2026, we expect the company to achieve revenue of 1.681/1.778/1.884 billion yuan, a year-on-year increase of 5.73%/5.81%/5.91%, net profit of 0.139/0.159/0.181 billion yuan, a year-on-year increase of 30.50%/14.61%/13.94%, corresponding PE 68/59/52 times, respectively, maintaining the “recommended” rating.

Risk warning: Market competition increases risk, centralized procurement risk, market policy risk, risk of new product development falling short of expectations, risk of product sales promotion falling short of expectations, risk of impairment of accounts receivable, risk of impairment of accounts receivable, etc.