Sino Biological Inc(301047) (301047)
Sino Biological Inc(301047) is a leading enterprise in the field of recombinant protein in China. The company provides global pharmaceutical enterprises and scientific research institutions with high-quality biological reagents and high-level technical services. At present, there are more than 47000 kinds of spot products produced and sold, including more than 6000 kinds of recombinant proteins, which can fully meet the needs of customers for recombinant proteins closest to the structure and properties of human natural proteins; More than 4600 kinds of monoclonal antibodies are provided to provide a “one-stop” channel for purchasing biological reagent products and related technical services for basic scientific research directions such as molecular, cell, immunity, development and stem cell research and innovative drug research and development. In 2020, the company’s operating revenue was RMB 1.596 billion, with a year-on-year increase of 783%, of which recombinant protein accounted for more than 60% of conventional business, ranking third in China. 21q1-q3, the company’s revenue was 813 million yuan, a year-on-year decrease of 23.92%, mainly due to the decrease of covid-19 products.
The protein reagent market of 17 billion yuan has developed rapidly, and the company has the first market share in the field of recombinant protein in China. The space of protein reagent industry continues to expand with the rapid development of biomedicine. It is estimated that the market scale of protein reagent is expected to reach 17.8 billion yuan in 2025, and the compound growth rate will reach 19% in the next five years, which has considerable imagination space. Among them, recombinant protein is an important component of protein reagents. The company occupies a leading position in the industry with comprehensive advantages such as R & D strength, quality control and brand recognition. In 2019, China’s market share was about 4.9%, ranking third in China and first in China.
Recombinant protein expression involves a series of know-how technologies, with high barriers and significant leading advantages of the company. Recombinant protein expression is a complex and flexible system, including molecular analysis, expression sequence optimization, expression vector construction, host selection, cell transfection, protein expression, protein purification, small amount of attempt, scheme optimization, large-scale production, quality detection and so on. The company has been deeply engaged in the field of recombinant protein for many years and has established multiple core technology platforms, which can efficiently develop diversified biological reagents to meet the customized needs of downstream customers. It has obvious advantages over Chinese and foreign competitors in the fields of success rate, expression flux, efficiency speed and production cost of R & D and production, In the future, the company is expected to continue to expand its market share and maintain rapid growth with industry-leading process technology.
Diversified businesses are rapidly arranged to continuously open up growth space. The company has adhered to independent innovation for many years, has profound process precipitation and technical advantages in the field of biological reagents, and has accumulated rich customer resources. In addition to recombinant proteins, the company is currently active in biological reagent products such as monoclonal antibodies, plasmids and culture media, as well as cro services such as biological analysis and detection and antibody development. In the future, it is expected to grow into a comprehensive biological reagent supplier, provide packaged whole product solutions for downstream customers and enjoy a broader development space.
Profit forecast: we estimate that the company’s revenue from 2021 to 2023 will be RMB 1027, 838 and 878 million, with a year-on-year increase of – 35.62%, – 18.47% and 4.76%, and the net profit attributable to the parent company will be RMB 613, 430 and 402 million, with a year-on-year increase of – 45.68%, – 29.81% and – 6.40%, corresponding to EPS of 901, 6.32 and 5.92. At present, the company’s share price corresponds to 57 times PE in 2022. Considering that the company has industry-leading recombinant protein development platform technology, and its conventional business is expected to continue to maintain a high growth trend in the future, combined with the valuation analysis of comparable companies, we believe that the reasonable valuation range of the company is 60-65 times PE in 2022, which is covered for the first time and rated as “buy”.
Risk tips: new product R & D risk, policy change risk, increased market competition risk, the risk that the sales growth measurement is less than expected, the risk of deviation in market space measurement, the risk of certain screening of data samples or certain deviation from the actual situation, and the risk of delayed information or untimely update of public materials used in the research report, The high uncertainty in the sales of epidemic virus related products may lead to the risk of performance decline.
