First coverage
Investment highlight
Covering Kekai Technology (688356) for the first time, it gives a rating of outperforming industry, with a target price of 197.10 yuan (based on DCF valuation method). The company is a leading R & D and production enterprise of medical polyethylene glycol (PEG) derivatives in China, headquartered in Haidian, Beijing, and established in 2001. The reasons are as follows:
Jiankai Technology is a leading R & D and production enterprise of medical PEG in China. The company is one of the few companies at home and abroad that can carry out the industrial production of medical polyethylene glycol and active derivatives with high purity and low dispersion. it fills the gap of domestic long-term lack of large-scale production of high-quality medical polyethylene glycol and its derivatives, and is also a major emerging participant in the global market. 2021/1H22, the company's fixed assets are 129 million yuan, and the projects under construction are 0.86 billion yuan, respectively, entering a new round of production capacity construction period, IPO fund-raising project Liaoning Jiankai is under construction, the company expects 4Q22 to be delivered and trial production, and officially put into production at the beginning of 2023.
PEG and its derivatives are rich in variety, widely used and have a wide market. PEG has excellent biocompatibility and hydrophilicity, can improve the cytocompatibility of copolymer polymer materials, and has great potential in drug controlled release and reprinting applications of new biological drugs such as proteins, peptides and oligonucleotides. PEG is also widely used in the field of medical devices and medical materials.
Continue to expand downstream demand, with good room for growth. The company has three major technology platforms: high-purity PEG raw material development technology, medical PEG active derivative development technology, and PEG pharmaceutical application innovation technology. The company's PEG and its active derivatives are widely used in protein / peptide drugs, medical devices, vaccines, LNPs and PROTAC Linker and other fields, with a good growth space. At the present stage, the company's existing cooperative products (Jinsaizeng, Pagobin, Aido and Flame, etc.), the terminal volume leads to the growth of the demand for the company's products, the new cooperative products will be promoted to commercialization in the future, and the independent products will advance steadily. Small molecular drugs + medical beauty field has a layout, showing good growth.
What is the biggest difference between us and the market? We believe that PEG and its derivatives have a broad market scale and rich application scenarios in the fields of peptide drug modification, vaccines and innovative devices.
Potential catalyst: the continuous commercialization of the company's cooperative products and the smooth progress of the company's independent products.
Profit forecast and valuation
We estimate that the company's 2022 EPS and CAGR for 2023 will be 3.94, 5.43 and 36.5 respectively. For the first time, it covers the rating of the outperforming industry, which is based on the DCF model (WACC 7.6%, sustainable growth rate 1.0%), giving a target price of 197.10 yuan, which has 15.5% upside space compared with the current stock price.
Risk.
Risk of failure in R & D of innovative pharmaceutical products; risk of iteration of core technology; risk of international trade protection in the United States.