Event: on April 24, 2022, the company released its quarterly report on 2021 and 2022: the company's operating income for the whole year of 2021 was 6.766 billion yuan, down 19.42% from the same period last year; the return net profit was 1.462 billion yuan, down 30.08% from the same period last year; deducting the non-return net profit was 1.358 billion yuan, down 33.71% from the same period last year. In the first quarter of 2022, the company's revenue was 1.43 billion yuan, down 8.52% from the same period last year, and its net profit was 330 million yuan, down 37.06% from the same period last year.

Q1 performance in 2021 and 2022 was in line with expectations, and the revenue of non-COVID-19 business increased steadily by 6.766 billion yuan in 2021, down 19.42% from the same period last year, mainly due to the decline in the global price of COVID-19 nucleic acid kit and testing unit. COVID-19-related business had a high base in 2020, and its performance declined in 2021 compared with the same period last year. In terms of routine business, the company's infection prevention and control income in 2021 was 1.158 billion yuan, an increase of 73.01% over the same period last year. Metagenomics testing was launched in the hospital, and the PMseq Datician pathogen expert analysis system and PM Easy Doctor pathogen group big data analysis kit were launched, and nearly 200000 people were tested.

The company's reproductive health income reached 1.192 billion yuan, an increase of 1.24% over the same period last year, covering 156 diseases including common genetic metabolic diseases, deafness, thalassemia and so on. The company's tumor prevention and control revenue was 380 million yuan, an increase of 8.12% over the same period last year. Tumor MRD customized testing products are listed and sold in the Chinese market. The company's revenue in the first quarter of 2022 was 1.43 billion yuan, down 8.52% from the same period last year, mainly because the settlement of some Hong Kong businesses in the first quarter was affected by the COVID-19 epidemic.

The internationalization strategy continues to advance, and the conventional business gradually increases the overseas product reserve companies to deepen their overseas business. at present, it has covered more than 100 countries and regions around the world. there are more than 3000 overseas medical and scientific research institutions cooperating in Europe, America, Asia-Pacific and other regions. In COVID-19 's business, the company COVID-19 testing products have covered more than 180 countries and regions, a total of nearly 100 "Fire Eye" laboratories have been launched overseas. COVID-19 Business support Company has established direct cooperative relations with a number of governments, multinational corporations, foundations and non-governmental organizations, gradually extending from COVID-19 's business to conventional business development. In terms of regular business, the company has carried out the strategic planning of "front shop and back factory" and has established overseas localized IVD production plants, including IVD plants in Africa, Ethiopia and Saudi Arabia, dedicated to providing regional closed-loop services for public health values. In terms of product approval, in 2021, a number of products of the company were approved for EU CE access, including auxiliary diagnostic testing of colorectal cancer, ctDNA testing of lung cancer, thalassemia test, automatic PCR analysis system, etc. In India, the company obtained access qualifications for non-invasive prepartum genetic testing products; in Saudi Arabia, four products were approved for market, including thalassemia gene, bowel cancer, lung cancer and neonatal genetic metabolic screening.

Profit Forecast: the company is the leading enterprise in precision healthcare. Due to the spread of COVID-19 epidemic, the demand for testing is still there. It will increase its income from 44.27,47.51 to 58.34 and 6.225 billion yuan in 2022-2023. It is estimated that the income in 2024 will be 6.792 billion yuan, and the net profit in 2022-2024 is expected to be 10.35,11.35 and 1.263 billion yuan. The current stock price corresponds to the PE of 24.22,22.09,19.85 in 2022-2024. Upgrade to "buy" rating.

Risk hint: the risk of uncertain progress of COVID-19 epidemic, the risk that R & D is not as expected, the risk of exchange rate change, and overseas business promotion is not as expected.