The animal model is an emerging industry, and the domestic market will grow at a compound rate of 28.8% in the future. Under the background of the rapid growth of life science research and development, drug research and development and CRO preclinical research and development, the global and Chinese animal model market has developed rapidly in recent years. According to GMI and Frost&Sullivan data, the global animal model market increased from US $10.3 billion to US $14.9 billion in 2015-2019, and the Chinese animal model market increased from US $200 million to US $400 million. It is estimated that the global and domestic animal model CAGR for 2019-2023e will be 8.8% and 28.8% respectively, and the Chinese animal model market will reach US $1.1 billion by 2023.
The domestic animal model market is relatively scattered, and the company's market share has much room for improvement. According to Frost & Sullivan data, in terms of customized mouse models, the domestic market size in 2019 was 430 million yuan, and four leading enterprises accounted for about 30% of the market share. The company earned about 40.1 million yuan in 2019, with a market share of about 9.2%, ranking second among domestic enterprises and in the forefront of domestic market share. In terms of standardized models, the domestic market in 2019 is about 1.6 billion yuan. Weitong Lihua occupies the first place with a market share of 13.7%, and the company has a market share of 2.5%. In recent years, the company has continuously accelerated the research and development of standardized models. at present, the number of standardized models has exceeded 7200, and the business of standardized mouse models is growing in the future.
The core technology builds the moat of the company and enjoys the high growth dividend of the industry. The company uses ES cell targeting and CRISPR gene editing technology to construct genetically engineered animal models. In terms of CRISPR gene editing, the company basically eliminates the effect of miss effect, optimizes the Cas9 protein and gRNA sequence, selects high-fidelity Cas protein to improve the matching degree of Cas protein with gRNA and target, on the other hand, selects the gRNA site with the least miss risk by developing Smart Eddi system to detect and quantify the score of gRNA potential miss effect. The company has many patents for its core technology, among which the application of CRISPR/Cas9 gene editing technology in eukaryotic system is first patented by Zhang Feng team of Broad Research Institute. Relying on these core technologies, the company is expected to enjoy high growth dividends in the industry.
Profit forecast. With the rapid growth of downstream demand, on the basis of the expansion of the company's own production capacity, and the rapid growth of humanized mice and other businesses, it is estimated that the company's return net profit from 2022 to 2024 will be RMB 1.23 billion, corresponding to a growth rate of 44.4%, 40.1% and 40.2%, corresponding to the current market capitalization PE of 44-32-23, covering for the first time and giving buying rating.
Risk hints: the risk of intensified competition in the industry; the risk that the expansion of downstream customers is not as expected; the risk that the growth of the industry scale is not as expected.