Adopted shares (301122)
The troika of medical instruments, veterinary instruments and laboratory consumables keeps pace
The company focuses on manufacturing injection and puncture instruments and laboratory consumables. It is a leading injection and puncture service provider in China. The company has established a complete product quality control system. It is an earlier manufacturer in the industry to establish a complete quality control system. The company’s products have been widely recognized. In 2021, the company achieved an operating revenue of 442 million yuan, a year-on-year decrease of 12.47%, mainly due to the rise in the revenue of mask business in 2020. After excluding masks, the company’s main business revenue increased by 78.45% year-on-year.
The market demand for puncture and injection instruments is large, and China is the main producer and exporter of syringes
According to the data of medical equipment research institute, in 2019, China’s medical consumables accounted for 32% of the market in the medical device industry, and the growth rate of China’s industry was about 20%. It is estimated that the market scale of low-value medical consumables will reach 97 billion yuan in 2020, with a year-on-year increase of 25.97%. Among the low-value medical consumables, the market share of injection puncture is about 30% of the low-value medical consumables market, and the market scale is about 29.1 billion yuan. According to qyrresearch data, in 2018, the output of disposable syringes in China accounted for about 34.7% of the global output. According to OEC data, in 2018, the total global trade volume of syringes was US $4.91 billion, and China’s syringe export accounted for 11.32%, ranking second only to 13.68% of the United States.
Product strength builds competitive advantage, and overseas customers have accumulated profound experience
The company’s product sales are mainly in overseas regions. Excluding the impact of mask business, the overseas sales revenue of its main business accounts for more than 80%. The company has stable upstream and downstream supply and demand, and forms stickiness with well-known customers. Overseas customers include world-famous enterprises such as Neogen, MEDLINE, thermofisher and McKesson. Due to the strict selection of suppliers by customers, some products of the company are irreplaceable to a certain extent, and the company has become the exclusive supplier of some customers, with strong cooperation sustainability.
The product quality is internationally recognized, and the R & D strength is leading in the industry
The company’s main products and related core technologies are developed independently, and some products have their own characteristics in process design, material development, function realization and so on. The intelligent production workshop and automatic storage system independently developed by the company have achieved industry leadership and effectively improved production efficiency while ensuring product quality. The company has passed ISO13485, mdsap and other quality system management certification, and its main products have obtained CE certification or FDA product registration.
Profit forecast and investment rating
We estimate that the operating revenue of the company from 2022 to 2024 will be 679 million yuan, 1034 million yuan and 1529 million yuan respectively, and the net profit attributable to the parent company will be 199 million yuan, 305 million yuan and 415 million yuan respectively. We use the PE relative valuation method of comparable companies to evaluate the company. We select Shanghai Kindly Enterprises Development Group Co.Ltd(603987) , Zhejiang Gongdong Medical Technology Co.Ltd(605369) , Nanjing Vazyme Biotech Co.Ltd(688105) , Shenzhen Changhong Technology Co.Ltd(300151) as comparable companies, giving the company 48 times of the target PE in 2022 and 101 yuan of the target price, For the first time, give a “buy” rating.
Risk tips: ① risk of project implementation of raised funds; ② Price fluctuation risk of raw materials; ③ Risk of brain drain of core technology; ④ Export business risks caused by Sino US trade frictions; ⑤ Customer concentration risk; ⑥ The risk of declining business performance of mask business; ⑦ Product quality control risk
