Founded in 2011, Xingke Rong Pharmaceutical, headquartered in Chengdu, Sichuan Province, China, is the largest comprehensive marketing, promotion and channel management service provider for human serum albumin in China. The company's main business is acting for imported human serum albumin and antibiotics, and last year began to enter the medical blue sea track, layout of young girl needles, to create a "PCL+X" product matrix.
Summary of the report
The main business is to strive for progress in the midst of stability, and enter the Medical and Beauty Blue Ocean track. The company's income comes from blood products and antibiotics, of which human serum albumin is the main source of income, accounting for 97%. On the other hand, the company began to lay out the medical track in 2021, gradually establishing the overall industrial layout from the research and development, production and sales of medical raw materials and products to the terminal organization, and constantly expanding the product line.
Blood products: the blood products industry has extremely high license barriers and rigid demand. As a strategic resource, there is a certain supply gap at present. In order to make up for the gap, China is only allowed to import human serum albumin and recombinant blood products. As the leading product of blood products, the import proportion of human serum albumin has been maintained at about 60% for a long time, of which the market share of human serum albumin represented by the company is about 10%, ranking first in the country. This year, the company has received an exclusive national license from Okkert Farmar's French factory albumin, and the company's albumin sales are expected to increase further, while the company is working with Okkert Farmar to introduce its recombinant heavyweight products. We believe that with the introduction of the reorganized products and French factory albumin, it will further open up the market space and improve the company's profitability.
Medical beauty: China's medical beauty industry is in a stage of rapid development. According to Frost & Sullivan statistics, China's medical beauty market grew from 77.6 billion yuan in 2016 to 154.9 billion yuan in 2020, with a CAGR of 18.9%. It is the second largest medical beauty market in the world and its growth rate is much higher than the global growth rate (2.2%). The market size is expected to reach 653.5 billion yuan in 2030, four times that in 2020. In the future, with the impact of factors such as the upgrading of consumption, the change of population structure, the gradual maturity of medical technology and the rise of online celebrity / live broadcast economy, China has a broad market space for medical beauty. Despite the large scale of China's medical and beauty market, the penetration rate is still low compared with other countries. In 2019, the number of medical treatments per thousand people in China is only 17.4, which is half of that of Japan and 1/5 of that of South Korea. The girl needle developed by the company is expected to be approved in 2024 and is expected to become the first domestic self-developed girl needle in China. At present, the competition pattern of domestic girl needle is good, only one imported girl needle is on the market, that is, Eyanshi of East China Medicine. The company also relies on polycaprolactone raw materials to develop a series of products "PCL+X", derived from a variety of medical and beauty products, suitable for face, neck and other parts. It is expected that with the successive listing of the product matrix, it will become a new profit growth point for the company.
Profit forecast: not considering young girls' needles for the time being, we initially estimate that the company's income from 2022 to 2024 will be 2.221 billion yuan, 2.482 billion yuan and 2.982 billion yuan respectively, and the net profit will be 131 million yuan, 130 million yuan and 163 million yuan respectively.
Risk hints: policy risks; the progress of products under development is not as expected; competition in the industry is intensified; capacity release is not as expected.