\u3000\u3 Guocheng Mining Co.Ltd(000688) 105 Nanjing Vazyme Biotech Co.Ltd(688105) )
The biological reagent industry has entered a period of development, and import substitution is in the ascendant
The field of life sciences in China is developing rapidly, and the investment in scientific research is increasing. In 2019, the investment in basic life science research, drug discovery and preclinical research of drugs was 86.6 billion, with a compound growth rate of 18.8% from 2015 to 2019, higher than the growth rate of global funds in the field of life sciences. 10-15% of the investment in life science research is used for the investment of biological reagents, including enzymes, antigens, antibodies and other raw materials. The field of biological research reagents in China started late and is being replaced by imports. In terms of product types, biological research reagents are divided into molecules, proteins and cells, of which molecules account for the highest proportion of 50.9%.
The core competitiveness of the four Technology Platforms + enzyme library has initially formed the viscosity of downstream customers
After nearly 10 years of technical iteration, the company has built a key common technology platform and enzyme library around functional proteins – 1) four core technology platforms to build R & D barriers. Through the protein targeted transformation and evolution platform, the high-performance antibody discovery platform of single B cells, the modular multi system recombinant protein preparation platform and the quantum dot modification coupling and multi index joint inspection technology platform, the company is fast, efficient and reliable Product development is carried out on a large scale. There are more than 200 kinds of genetically engineered recombinant enzymes and more than 1000 kinds of key raw materials such as high-performance antigens and monoclonal antibodies. 2) Enzyme libraries meet the needs of different customers. Enzymes mainly involve high-throughput sequencing, isothermal amplification, PCR and qPCR, covering tens of thousands of huge variant enzyme libraries. With the enzyme library and technology platform, the company’s customers cover more than 1000 scientific research institutions, more than 700 high-throughput sequencing service enterprises, more than 700 molecular diagnostic reagent manufacturers and more than 200 pharmaceutical R & D enterprises.
Covid-19 antigen detection kit was approved in China and ushered in the second growth curve
In March 12, 2022, the company COVID-19 antigen test kit was approved by China, which could be used to detect suspected New Coronavirus infected people. The antigen detection reagent can be used as an auxiliary and supplement for nucleic acid detection, and further improve the ability of early detection with the national New Coronavirus detection strategy. As of March 19, 2022, the State Food and drug administration has approved 17 covid-19 virus antigen detection reagent products. Due to the COVID-19 epidemic and the variation of the strains, COVID-19 detection will still be more demanding in the next two years. The New Coronavirus antigen detection reagent products approved by China will further enrich the application scenarios of New Coronavirus’s overall testing solution, and help to enhance the competitiveness of the company in related fields.
Profit forecast and Valuation: we estimate that the company’s revenue from 2021 to 2023 will be 1.864 billion yuan, 2.440 billion yuan and 2.668 billion yuan respectively, and the net profit attributable to the parent company will be 678 million yuan, 880 million yuan and 978 million yuan respectively. In the field of life science business, four targets are selected: Shanghai Titan Scientific Co.Ltd(688133) , Sino Biological Inc(301047) , Acrobiosystems Co.Ltd(301080) , Shanghai Aladdin Biochemical Technology Co.Ltd(688179) as comparable companies. Combined with the fact that the average PE of comparable companies is 48 times in 2022 and the approval of antigen detection will bring growth space, so the company is given a certain valuation premium. The PE in 2022 is 58 times and the corresponding target price is 128 yuan. If it is covered for the first time, it is given a buy rating.
Risk warning: covid-19 epidemic uncertainty risk, covid-19 antibody detection kit sales decline risk, increased competition risk, new product development and promotion less than expected risk, unsustainable growth of business performance and decline of bid winning unit price of covid-19 detection reagent under centralized procurement policy;
