The company is a high-tech enterprise focusing on the field of pathological diagnosis. Pathological diagnosis is an important branch of in vitro diagnosis. The development of the domestic market is lagging behind. There is a huge gap in the number of diagnosticians. Using 5% as the share of the pathology market, it is estimated that the size of the pathology market in China exceeded 4 billion yuan in 2020. The company's business focuses on three technology platforms for cytological diagnosis, immune diagnosis and molecular diagnosis, including four product lines: LBP series, PCR series, FISH series and IHC series. In 2017-2019, revenue increased from 260 million yuan to 360 million yuan, a compound growth rate of 16.8%, and Guimu's net profit increased from 50 million yuan to 70 million yuan, a compound growth rate of 24%.
The cervical cancer screening market is expected to open up, and the company's liquid-based cytology+HPV testing is a two-pronged approach. There are 100,000 new cases of cervical cancer in China every year, accounting for 1/5 of global cases. Cervical cancer testing in China started late and is constrained by the economic level. The coverage rate of cervical cancer screening for school-age women in China is less than 30%. However, about 200 million school-age women in China need testing, and the population base is large. Currently, the combined use of liquid-based cytology and HPV virus testing is gradually becoming the mainstream direction of cervical cancer screening. The company also has liquid-based cytology (LBP) and HPV detection reagents that fully cover the two major cervical cancer screening methods: cytology tests and HPV tests. In terms of the diversity and comprehensiveness of diagnostic technology, they all have obvious advantages compared to other companies in the same industry. In 2019, the company's LBP series+PCR series product revenue was 250 million yuan, accounting for 78.3% of total operating income, and joint screening revenue was 80 million yuan, accounting for 32.4% of LBP series+PCR series product revenue.
The market demand for oncology companion diagnostics is strong, and the company's FISH and ICH products are growing rapidly. According to the “2018 Global Cancer Statistics”, China accounted for 21% and 24% of the world's new cancer cases and deaths in 2018, respectively. The huge cancer patient base was stimulated by diagnostic demand, and the market size has maintained growth of more than 30% in recent years. From a technical perspective, along with the diagnostic market, which can be divided into PCR, FISH, IHC and NGS, the company mainly lays out the FISH+ICH technology field. In 2019, the company's FISH product revenue was 0.4 billion yuan, an increase of 34.5% over the previous year. The company's FISH product registration/registration certificate number was leading in China and had a first-mover advantage. In the 2018 breast cancer HER-2 amplification FISH test, the hospital coverage rate was second only to Abbott, a leading company in the industry, reaching 31%. In the field of ICH companion diagnostics, the current product market is mainly dominated by overseas manufacturers. The company's IHC series has a competitive advantage in terms of technical level and number of products. In 2019, the company's ICH product revenue was 21.51 million yuan, and CAGR2017-2019 reached 295.5%.
Profit forecasting and valuation. The proportion of products produced by the company has gradually increased in recent years. Along with strong demand for diagnostic products such as FISH and ICH products, it is expected that growth will continue to be high in the future. EPS is expected to be 0.97, 1.22, and 1.50 yuan in 2020-2022, respectively. Referring to comparable companies, 50 to 60 times PE was given in 2020, and the corresponding price range per share was 48.5 to 58.2 yuan.
Risk warning: The impact of the epidemic on uncertainty, falling product prices, falling new product expansion falling short of expectations, and the risk of R&D failure.
