东富龙(300171)深度报告:蛟龙出海 全产业一体化战略打破周期

Dongfulong (300171) In-depth Report: Jiaolong's full-industry integration strategy breaks the cycle by going overseas

民生證券 ·  10/16/2022  · Researches

The upstream biopharmaceutical market space is vast, and Dongfulong is leading development as a leader in domestic pharmaceutical equipment. Dongfulong is committed to smart pharmaceutical factory deliverers, developing in all directions in the fields of equipment consumables and engineering, and providing overall solutions. Dongfulong has accumulated a lot of money, bioengineering and consumables have entered the release stage. In 2022, H1 contract liabilities were 3.9 billion yuan, an increase of 41% over the previous year, demonstrating that the company's performance is likely to grow strongly.

Front-end layout of biopharmaceutical processes, digital intelligence enhances overall solution delivery capabilities, and localization helps pharmaceutical companies reduce costs. The global market for upstream biopharmaceutical equipment consumables exceeded $30 billion in 2021. The rapid development of the domestic biopharmaceutical industry has opened up market space for domestic biopharmaceutical equipment. Compared with chemical equipment, biopharmaceutical equipment has many categories, the chain is long, the industry cycle attributes have clearly weakened, and the willingness to replace it with localization is strong. Cost control is one of the main favorable domestic substitution factors. For a 500L scale reactor, if the equipment price falls by 50%, the monoclonal antibody production cost will drop by 30%; for the 15000L scale, the decrease is about 24%. Domestic substitution of pharmaceutical equipment will effectively promote the healthy development of China's biomedical industry. Digital intelligent systems and equipment process support enhance overall solution delivery capabilities and enhance the competitiveness of international suppliers.

Dongfulong has a deep layout in the bioengineering sector, with a long production chain, high barriers, rapid iteration, and weak periodicity.

Dongfulong has accumulated a lot and implemented the M+E+C strategy for all categories. It gradually transitioned from stand-alone machines to systems, engineering, and overall solutions, and rapidly released volumes in various categories such as stainless steel reactors, disposable reactors, and consumables.

The company laid out the CGT field to establish medium- to long-term growth. The cell culture medium was registered by the US FDA with the DMF, which helped with biopharmaceutical declaration. The total revenue of the bioengineering and medical device sectors in 2021 was about 1.4 billion yuan, an increase of 200% over the previous year. The company is expected to continue to expand its growth ceiling through product pipeline enrichment and maintain steady growth in performance.

Investment suggestions: As a leading domestic pharmaceutical equipment, the company is committed to becoming a world-class supplier in the field of pharmaceutical manufacturing science, and is expected to achieve continuous growth in orders in the biopharmaceutics and CGT fields. We expect net profit from 2022-2024 to be 99,12.7 billion yuan, and 1.58 billion yuan respectively, up 20.1%, 28%, and 24% year-on-year respectively. The corresponding PE is 17, 13, and 11 times, maintaining the “recommended” rating.

Risk warning: Domestic substitution and overseas business expansion fall short of expectations, domestic new drug research and development volume and progress fall short of expectations, fixed increase falls short of expected risk

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