\u3000\u30 Zhongyan Technology Co.Ltd(003001) 71 Tofflon Science And Technology Group Co.Ltd(300171) )
Performance: high net profit growth
The company released the annual report of 2021. In 2021, the total revenue of the company was 4.19 billion yuan, a year-on-year increase of 54.8%; The net profit attributable to the parent company was 830 million yuan, a year-on-year increase of 78.6%; The net profit margin attributable to the parent company is 21.1%. In a single quarter, the revenue of 2021q4 was 1.31 billion yuan, a year-on-year increase of 55.3%; The net profit attributable to the parent company was 270 million yuan, a year-on-year increase of 53.8%; The net profit margin attributable to the parent company is 21.3%. We believe that the company’s revenue and profit performance in 2021 is in line with our expectations.
Growth capability: Bioengineering driven, international expansion
① from the perspective of business departments, we believe that 2022 is a new starting point for the switching of growth momentum: the sectors with the highest proportion of revenue in 2021 are injection single machine and system (accounting for 33%, with a year-on-year increase of 13.1%), bioengineering single machine and system (accounting for 21.6%, with a year-on-year increase of 305.2%), purification equipment and Engineering (accounting for 13.3%, with a year-on-year increase of 92.4%). From the perspective of the contribution of single machine and medical equipment to the increase of medical equipment and supplies (18.2% in 2021), the contribution of single machine and medical equipment to the increase of medical equipment and supplies was 17.2%. From the contribution of gross profit growth in 2021, the top three sectors of incremental contribution are bioengineering single machine and system (contribution increment of about 56.9%), medical equipment and consumables (contribution increment of 22.2%) and injection single machine and system (contribution increment of 12.8%). We believe that the company’s profit growth in 2021 is mainly driven by the capital expenditure of vaccine companies and other companies. Looking forward to 2022, we expect that the company’s revenue growth will still be in the fast lane: from the end of 2022, the ending value of contract liabilities reached 3.73 billion yuan, reaching the highest level since listing, and the proportion of contract liabilities in total assets is about 38.3%, an increase of 7.7 PCT year-on-year in 2020; In addition, the inventory at the end of 2021 was about 3.2 billion yuan, including 1.83 billion yuan of goods issued. From the carrying forward cycle of contract liabilities, goods issued and income, we expect to support the high growth of income in 2022.
② from a regional perspective, we believe that 2022 is a new starting point for international expansion: in 2021, the company’s Chinese revenue was 3.15 billion yuan, a year-on-year increase of 44.5%, accounting for about 75.2% of the total revenue, and its foreign revenue was 1.04 billion yuan, a year-on-year increase of 97.8%, accounting for about 24.8%; Among foreign income, European income accounts for 70.2%. We believe that the rapid growth of overseas revenue in 2021 is a new starting point of the company’s internationalization strategy. Covid-19 epidemic has opened the space for the international expansion of multiple varieties. We are optimistic about the international expansion space of the company’s equipment and consumables.
Profitability: structural adjustment and significant improvement
In terms of gross profit margin, the company’s comprehensive gross profit margin was about 46.1% in 2021, with a year-on-year increase of 4.3pct. We believe that the increase in gross profit margin comes from: ① the increase in the proportion of revenue in the high gross profit sector (such as the increase in the proportion of medical equipment and consumables revenue with 68.6% gross profit margin); ② The gross profit margin of stock business increased (for example, the gross profit margin of bioengineering single machine and system increased from 34.0% in 2020 to 58.8% in 2021, and the gross profit margin of API single machine and system increased from 33.1% in 2020 to 47.5% in 2022). In addition, we are also concerned that the gross profit margin of the company’s overseas business is higher than that of its Chinese business. Looking forward to 20222024, we expect that the proportion of consumables revenue is expected to further increase, and the expansion of overseas high gross margin projects will also help to maintain the overall gross margin of the company at a relatively high level. In terms of expense rate, the sales expense rate and management expense rate decreased year-on-year in 2021, and the R & D expense rate increased. Based on the company’s development strategy and R & D layout, we expect that the R & D expense rate will remain at a high level from 2022 to 2024, and the promotion and listing of new products may also increase the sales expense rate. After the expansion of the company’s personnel in 2021 (the total number of employees in 2021 was 3672, an increase of 38% year-on-year), we expect that with the reduction of cost and efficiency The cost of equity incentive decreased, the overall management fee rate may decrease, and the overall net interest rate is basically stable and slightly decreased from 2022 to 2024.
Viewpoint: international breakthrough, new business cultivation and new starting point
Development stage positioning: covid-19 order digestion, international breakthrough and new business cultivation. The core is speed and integration.
We believe that driven by the continuous listing of Chinese biopharmaceutical products and the independent control of downstream capital expenditure + supply chain, domestic equipment / consumables suppliers are in the window period of industry expansion and pattern reconstruction (for the analysis of specific market space and competition pattern, see our historical Industry Report). In all decentralized and niche links of the upstream pharmaceutical industry chain, We believe that the pharmaceutical machinery company is expected to become an integrated solution integrator. We expect the company to further strengthen the design and manufacturing capacity of high-end equipment in the window period of capacity expansion; At the same time, we also believe that the expansion of consumables / fillers and other fields depends more on the competitive elements of interdisciplinary disciplines such as materials science and bioengineering. The ability accumulated by the company’s historical business layout is more reflected in the manufacturing end. M & A and integration may be a better solution for the strategic layout of consumables and fillers in the window period.
Profit forecast and valuation
We expect that the company’s EPS from 2022 to 2024 will be 1.65, 2.06 and 2.67 yuan / share respectively, and the closing price on April 8, 2022 corresponds to 23 times of PE in 2022. We believe that the company is in the period of covid-19 order digestion, international breakthrough and new business cultivation. From the perspective of capacity-building, the company is a company with relatively complete upstream and downstream equipment product line layout and early start. The company’s M & A integration, market promotion and product R & D Progress in the field of medical equipment and consumables may exceed expectations. Taking into account the opportunities for the vigorous development of biomedical equipment under the post epidemic situation, And the company’s ability accumulation and layout in the field of traditional pharmaceutical equipment and biological pharmaceutical equipment / consumables, maintaining the “overweight” rating.
Risk tips:
Order delivery periodicity & volatility risk, M & A integration progress less than expected, goodwill impairment risk, price reduction risk caused by fierce market competition, etc.
