\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 080 Acrobiosystems Co.Ltd(301080) )
Biological research reagents continue to flourish, and recombinant proteins have broad prospects. Globally, the overall scale of the biological research reagent market is expected to increase from 83.2 billion yuan in 2015 to 159.9 billion yuan in 2024, with a CAGR of 7.5%. The overall scale of China is expected to increase from 7.2 billion yuan in 2015 to 26 billion yuan in 2024, with a CAGR of 15.3%. According to Frost & Sullivan report, with the active research and development of biological drugs and the in-depth exploration of life science mechanism, the global recombinant protein reagent market has increased from 3.3 billion yuan in 2015 to 9.8 billion yuan in 2024, with an annual compound growth rate of 12.9%. China’s recombinant protein reagent market is expected to increase to 1.9 billion yuan in 2024 and an annual compound growth rate of 18.9% from 2019 to 2024e, significantly leading the global average.
The Chinese market of recombinant protein is scattered, and there is a large space for domestic substitution rate. Chinese manufacturers of recombinant protein research reagents started late, and there is still a gap compared with overseas leading companies. The concentration of recombinant protein reagent industry in China is not high, and there is a large space for domestic substitution rate. With the support of national policies in recent years and the improvement of local enterprises’ scientific research ability, product quality and business level, domestic biological research reagents are expected to improve market competitiveness through the advantages of price, supply chain and service, gradually break the industry situation dominated by imported products and form import substitution.
The company focuses on drug target recombinant protein and builds an international brand. As an enterprise specializing in providing recombinant protein and other key biological reagent products, relying on six core technology platforms, the company continues to optimize the platform and develop new products. The products have been recognized by well-known pharmaceutical related enterprises and scientific research institutions at home and abroad.
Deeply cultivate old customers + expand new customers, and the company’s performance at home and abroad has achieved rapid growth. The company adopts the sales strategy of “direct sales first, supplemented by distribution”, and its customers are mainly concentrated in industrial enterprises in the pharmaceutical industry chain. Through deep cultivation of existing customers, continuous exploration of the needs of old customers and the expansion of new customers, the company’s overseas performance continued to grow rapidly. The CAGR of the company’s domestic revenue and overseas revenue from 2017 to 2020 were 85% and 68% respectively, of which overseas revenue accounted for more than 60%. The demand for biomedical research and development outside China continues to be strong. The company’s overseas layout is ahead of its Chinese counterparts. In recent years, the company’s product quality has been continuously improved, with price advantages and brand influence. In the future, with the weakening of the impact of the epidemic and the further expansion of the sales team in Europe and the Asia Pacific region, the company’s performance is expected to continue the rapid growth trend.
Profit forecast: we expect that from 2021 to 2023, the company’s revenue will be 392.3/540.3/750.7 million yuan respectively, with a year-on-year increase of 59.3% / 37.7% / 38.9% respectively; The net profit attributable to the parent company was 181.4/263.6/358.2 million yuan respectively, with a year-on-year increase of 56.5% / 45.3% / 35.9% respectively. The latest closing price corresponding to PE is 76 / 52 / 39 times respectively. The company is deeply engaged in the field of drug target protein, constantly improving the product system and product quality. Under the background of strong global demand for drug research and development, the company’s performance outside China is expected to achieve sustained and rapid growth and maintain the “buy” rating.
Risk warning: loss of customers; Sales are less than expected; New product development is not as expected; Overseas business expansion was less than expected.
