\u3000\u3 Bohai Water Industry Co.Ltd(000605) 369 Zhejiang Gongdong Medical Technology Co.Ltd(605369) )
Event: on April 17, 2022, the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the company realized an operating revenue of 1.194 billion yuan, a year-on-year increase of 43.95%; The net profit attributable to the parent company was 311 million yuan, a year-on-year increase of 37.68%; Net profit deducted from non parent company was 296 million yuan, with a year-on-year increase of 37.68%. In the first quarter of 2022, the operating revenue was 348 million yuan, with a year-on-year increase of 32.71%. The net profit attributable to the parent company was 95.05 million yuan, with a year-on-year increase of 19.77%. The net profit not attributable to the parent company was 92.63 million yuan, with a year-on-year increase of 32.84%.
The number of IVD consumables has maintained rapid growth under the disturbance of the epidemic. In 2021, the epidemic situation in China was tense, foreign trade freight congestion caused, and the products were hindered from going to sea. With the restoration of the diagnosis and treatment order in Chinese hospitals, the company’s domestic sales business achieved high growth (+ 85.30%), driving the improvement of the overall performance; 22q1 China’s epidemic situation has been disturbed repeatedly, and the company still maintains a strong growth rate, mainly due to the rapid recovery of OEM / ODM business and the rapid growth of IVD consumables products. At the same time, virus sampling tubes, pipettes and other products related to the epidemic also have a bright performance; The base caused by the profit and loss on the disposal of non current assets in the same period last year affected the growth rate of parent company in the first quarter.
The profit margin is adjusted due to comprehensive factors such as freight, raw materials and labor. It is expected to remain stable after normal operation. In 2021, the sales expense ratio was 4.80%, with a year-on-year decrease of 1.39pp, mainly due to the removal of transportation costs due to the adjustment of accounting policies, the management expense ratio was 5.29%, with a year-on-year increase of 0.13pp, mainly due to the amortization of equity incentive fees, the financial expense ratio was – 0.86%, with a year-on-year decrease of 2.2pp, and the R & D expense ratio was 4.88%, with a year-on-year increase of 0.42pp. In terms of profit margin, the company’s profit margin was adjusted due to the superposition of various factors such as exchange rate change, freight rise, raw material price rise and increase of subcontracting orders in 2021. The company’s gross profit margin was 44.36% in 2021, a year-on-year decrease of 5.17pp; The net interest rate was 26.04%, a year-on-year decrease of 1.19pp.
Customized IVD consumables increased by nearly 170%, driving the rapid development of conventional business (+ 57%). 1. In terms of conventional business, the company’s revenue from conventional products reached 1.083 billion yuan in 21 years, with a year-on-year increase of 57.63%, mainly due to the following aspects: (1) the high-speed volume of the company’s customized IVD consumables business. After years of layout in the in vitro diagnosis customized consumables industry, the projects developed in the early stage have been mass produced, and the reserved orders have entered the stage of income transformation. In 2021, the company’s customized IVD consumables business achieved a revenue of about 382 million yuan, a year-on-year increase of 169.15%, accounting for about 32% of the total revenue; Since 22q1, China’s diagnosis and treatment activities have continued to recover, and IVD consumables are expected to continue the high growth trend. (2) The restorative growth of China’s medical end products. In 2021, the overall covid-19 epidemic prevention and control in China was eased, the order of medical treatment was restored day by day, and the medical consumables of the company achieved rapid growth, including the revenue of vacuum blood collection series products of 226 million yuan, a year-on-year increase of 25.17%. 2. In terms of covid-19 business, the company’s covid-19 consumables revenue in 2021 was about 105 million yuan, a year-on-year decrease of 20.59%. It is mainly due to the natural decline in the demand for epidemic prevention products such as protective masks after the overseas epidemic situation is alleviated. Recently, the epidemic situation in China has continued to repeat, and sporadic outbreaks have occurred in many places in North and East China. Combined with the prevention and control of 22q1 epidemic situation, we believe that there is still considerable demand for covid-19 related consumables such as virus sampling tube, which is expected to contribute stable cash flow to the company.
The growth rate of R & D investment exceeded 50%, and the multi track layout provided sufficient impetus for medium and long-term development. The company continued to increase R & D investment and actively carried out multi-dimensional layout. In 2021, the company invested 582906 million yuan in R & D, with a year-on-year increase of 57.62%. Relying on the industry-leading development and design ability, the company prospectively arranged a number of innovative customized products such as high-precision sampling device for ophthalmic medical crystal solution, plasma noninvasive DNA collection and preservation tube for prenatal screening and diagnosis of fetal genetic diseases, which have entered the project acceptance stage, It is expected to replicate the IVD consumables business model and achieve rapid development in the future. In addition, the heat free cell culture series products developed by the company in the early stage have been officially put on sale, realizing the complete layout of the field of laboratory consumables, and are expected to contribute considerable performance in the future.
Profit forecast and investment suggestions: according to the data of the annual report and the first quarterly report, we adjusted the profit forecast. It is expected that the company’s IVD and drug packaging materials business is expected to continue to grow rapidly. From 2022 to 2024, the company’s revenue will be 1.497 billion yuan, 1.867 billion yuan and 2.435 billion yuan (1.437 billion yuan and 1.877 billion yuan in the previous 22-23 years), with a year-on-year increase of 25%, 25% and 30%; The net profit attributable to the parent company was 401 million yuan, 520 million yuan and 673 million yuan (406 million yuan and 508 million yuan in the 22-23 years before adjustment), with a year-on-year increase of 29%, 30% and 30%; The corresponding EPS is 3.56, 4.62 and 5.98 yuan. Considering that the company is the leader of China’s scarce customized IVD industry, it is expected to continue to grow rapidly in the next three years and maintain the buy rating.
Risk warning events: risk of new product R & D, risk of policy change, risk of intensified market competition, risk that sales growth is less than expected, risk that the public information used in the research report may lag behind or not be updated in time, etc.
