\u3000\u30003 Zhejiang Kingland Pipeline And Technologies Co.Ltd(002443) 00244)
Conclusions and suggestions:
Performance in 2021: the company achieved a revenue of 13.08 billion yuan, yoy + 22.9%, recorded a net profit of 1.16 billion yuan, yoy + 44.8%, and a net profit of 1.09 billion yuan, yoy + 47.8%, which was in line with expectations. Among them, Q4 achieved a revenue of 3.74 billion yuan in a single quarter, yoy + 17.8%, a loss of 70 million yuan, a year-on-year decrease of 30 million yuan. Q4 loss was mainly due to the company’s large amount of asset impairment and accrued expenses at the end of the year.
Pre increase of 22q1 performance: the company expects the net profit of 22q1 to be 710 million yuan to 810 million yuan, with a year-on-year increase of 110% to 140%, which is better than our expectation. The main reason is that covid-19 epidemic occurred in many places in 22q1, which led to the increase of covid-19 nucleic acid detection.
Covid-19 nucleic acid detection contributed significantly, and its main business still maintained rapid growth: (1) in 2021, the company’s diagnostic service revenue was 6.62 billion yuan, yoy + 30.3%, of which covid-19 nucleic acid detection business contributed 2.61 billion yuan (the company completed covid-19 nucleic acid detection of about 49 million tubes in 2021, a total of more than 128 million people), and the diagnostic service business excluding covid-19 nucleic acid detection realized revenue of 4.01 billion yuan, Yoy + 32.0% (an increase of 37.7% over 2019), of which the special inspection business achieved a revenue of 1.46 billion yuan, yoy + 45.9%, and the proportion of revenue continued to increase; (2) The company’s product business income is 7.32 billion yuan, yoy + 21.4%, of which the channel product income is 6.662 billion yuan, yoy + 17.8%, which is relatively stable. The income of self-produced products is 660 million yuan, yoy + 75.3%. The promotion of independent products is significant, and it is expected to become a stable driving force in the future.
The gross profit margin was stable and the expense side increased slightly: the company’s comprehensive gross profit margin in 2021 was 38.3%, unchanged year-on-year. During the period, the expense rate was 22.6%, with a year-on-year increase of 1.5 percentage points, of which the sales expense rate increased by 0.2 percentage points to 9.3%, and the management expense rate increased by 1.3 percentage points to 8.5%, mainly due to equity incentive expenses. The R & D expense rate increased by 0.3 percentage points to 3.3%, mainly due to the increase of labor costs, and the financial expense rate was 1.7%, with a year-on-year decrease of 0.2 percentage points.
Profit forecast and investment suggestions: at present, the nucleic acid detection volume under covid-19 epidemic situation in various regions remains high, and the short-term covid-19 detection business will still contribute more performance increment. In the medium and long term, the scale effect of the company’s diagnostic services will continue to be reflected, the proportion of high-end testing will continue to increase, independent products will also become a driving force, and the main business profit will continue to grow. We expect the net profit of 2022 / 2023 to be 1.69 billion yuan / 1.44 billion yuan, yoy + 45.6% / – 14.8%, EPS to be 2.7 yuan and 2.3 yuan, PE to be 10 times and 12 times respectively. Considering the strong demand for covid-19 nucleic acid detection under the short-term epidemic, we maintain the “buy” rating.
Risk warning: covid-19 nucleic acid testing service business shrinks, laboratory profits are lower than expected, the market competition of diagnostic products is fierce, the price drops, and the goodwill is impaired
