\u3000\u30 Zhongyan Technology Co.Ltd(003001) 71 Tofflon Science And Technology Group Co.Ltd(300171) )
Investment logic: 1) the company is a leading pharmaceutical equipment enterprise. Before the rise of the biopharmaceutical industry in China, its performance was more affected by the equipment production cycle, and its growth was limited by the ceiling of the industry. 2) In recent years, China’s biopharmaceutical industry has sprung up. The production mode dominated by fermentation corresponds to completely different equipment and consumables. The added value of the supply chain has increased, the value of consumables is large, and the industry expansion has weakened periodically. Covid-19 epidemic affected the supply cycle superposition, the improvement of the awareness of independent control of the industrial chain, and opened the process of domestic substitution. 3) Tofflon Science And Technology Group Co.Ltd(300171) has a good channel foundation in the industry, and the product layout in the field of biopharmaceutical equipment and consumables has been completed. With the improvement of product and service capacity, it is expected to build a platform company of equipment consumables.
It has been deeply cultivated for nearly 30 years to build a leading enterprise of pharmaceutical equipment in China. In terms of products, the company started with the business of freeze-drying machine, and then gradually expanded to the fields of freeze-drying system – post contracted production line – Food Engineering – bioengineering and consumables. In terms of channels, the company expanded from the field of injection to the field of API food engineering bioengineering, and the proportion of overseas business increased to about 25% in 2021h1. Whether in terms of products or channels, the company’s ability circle has been expanding, and the market share has been continuously improving, which has achieved the position of China’s leading pharmaceutical equipment enterprise. Over the years, the company’s performance is closely related to the equipment production and replacement cycle of the pharmaceutical industry, and its growth is more limited by the ceiling of the industry.
China’s biopharmaceutical industry is booming, opening the ceiling of pharmaceutical equipment industry. Before the rise of biological drugs, pharmaceutical equipment was mostly mechanical equipment. Among them, pharmaceutical packaging mechanical equipment accounted for the highest proportion, reaching 55.7%, followed by API equipment, accounting for 25.4%. The growth rate of the overall industry is expected to be equivalent to that of fixed asset investment in the pharmaceutical industry. The equipment and consumables for the production of biological drugs based on fermentation have been standardized in Europe and America. Unlike the pharmaceutical equipment based on mechanical equipment in the field of chemical drugs and traditional Chinese medicine, the equipment and consumables for the production of biological drugs have higher technical barriers and higher added value of products. We estimate that the market space of equipment consumables brought by the production of biological drugs in China is 70.1 billion yuan, including 38.3 billion yuan of consumables. The larger market space of consumables in the field of biological drug production is enough to break the original cycle attribute of the industry. Since 2017, China’s biopharmaceutical fermentation capacity has increased significantly, and the equipment and consumables market has expanded rapidly. While European and American enterprises seize the market, they have cultivated localized talents and domestic enterprises, and domestic products have realized “from scratch”. Under the trend of covid-19 epidemic, the supply cycle has been extended, and the trend localization of biopharmaceutical production equipment and consumables has just begun, which will fully benefit relevant enterprises.
With the joint development of products and channels, Tofflon Science And Technology Group Co.Ltd(300171) is expected to become a platform enterprise for the industrialization of biological drugs. Starting from the production of freeze-drying machines, the company has strong product advantages and channel advantages in pharmaceutical equipment and systems. As a leading enterprise, the company can enjoy the industry benefits brought by the preparation filling and post packaging line of the development of biological drugs β Bonus. At the same time, the layout of bioreactor, disposable bag, culture medium, filler ultrafiltration system and other equipment and consumables in stock solution preparation and production has formed a product closed loop. With the improvement of product capacity in each link and the company’s forward-looking layout in the field of CGT, with the original channel advantages, it is expected to quickly realize the transformation from a product-based enterprise to a platform-based enterprise.
Profit forecast and investment suggestions: it is estimated that with the overall upward prosperity of the industry and the rapid growth of the company’s bioengineering and consumables field, the company will realize a revenue of 3.873 billion yuan, 5.042 billion yuan and 6.537 billion yuan from 2021 to 2023, and a net profit attributable to the parent of 846 million yuan, 1.174 billion yuan and 1.540 billion yuan. As a leading pharmaceutical equipment enterprise, the company is expected to enjoy the industry dividend brought by the development of biological drugs in China. At the same time, it is expected to achieve a breakthrough in the field of biological drug equipment and consumables, reduce the periodicity and maintain the growth of the market for a long time. We are optimistic about the company’s layout in the field of biopharmaceutical equipment and consumables in the next few years. Under the background of domestic substitution, we will achieve rapid and large-scale production. With reference to the valuation of similar companies in the industry and the company’s historical valuation, the company still has valuation cost performance in the current position and is given a “buy” rating.
Risk tip: industry boom decline risk; The product volume is less than expected; The export of products was less than expected.
