\u3000\u3 Guocheng Mining Co.Ltd(000688) 105 Nanjing Vazyme Biotech Co.Ltd(688105) )
Event: on April 21, 2022, the company released the annual report of 2021 and the report of the first quarter of 2022. In 2021, the company achieved a total operating revenue of 1.869 billion yuan, a year-on-year increase of 19.44%; The net profit attributable to the parent company was 678 million yuan, a year-on-year decrease of 17.46%; The net profit deducted from non parent company was 644 million yuan, a year-on-year decrease of 20.90%. In 2022q1, the company realized an operating revenue of 975 million yuan, a year-on-year increase of 80.07%; The net profit attributable to the parent company was 431 million yuan, a year-on-year increase of 28.18%; The net profit deducted from non parent company was 413 million yuan, with a year-on-year increase of 25.79%.
The three business segments made concerted efforts, and the performance of 2021 increased rapidly. In 2021, the company’s main business grew rapidly, of which the sales revenue of conventional business was 719 million yuan, a year-on-year increase of 91%; Covid-19 related businesses achieved a sales revenue of 1.149 billion yuan, a year-on-year decrease of about 3.25%. Specifically, the company’s three business segments of life science, in vitro diagnosis and biomedicine made concerted efforts: (1) the sales revenue of life science business was 1.339 billion yuan, including 533 million yuan of conventional business revenue, a year-on-year increase of 66%, and 806 million yuan of covid-19 business revenue, a year-on-year increase of 21%. In 2021, the Life Sciences Division developed 128 new products, completed product upgrading and performance improvement in multiple categories, and developed more than 800 kinds of biological reagents in total. (2) The sales revenue of in vitro diagnosis business was 433 million yuan, of which the revenue of routine business was 89 million yuan, a year-on-year increase of 104%, and the revenue of covid-19 business was 344 million yuan, a year-on-year decrease of 34%. By the end of 2021, the company’s in vitro diagnosis business has covered more than 2200 hospitals, third-party testing centers, physical examination institutions and other medical institutions. (3) The sales revenue of biomedical business reached 97 million yuan, with a year-on-year increase of 774%, realizing a breakthrough from “0” to “1”, and gradually forming three business directions of new drug / vaccine R & D reagent, vaccine clinical cro service and vaccine raw materials. The company has made major breakthroughs in the field of mRNA vaccine raw materials, and quickly completed the R & D and production of more than 10 core enzyme raw materials such as universal nuclease, T7 RNA polymerase, cowpox capping enzyme and 2-oxygen-methyltransferase.
Covid-19 antigen detection was rapid and large-scale, and the performance of 2022q1 exceeded expectations. In 2022q1, the operating revenue of the company has increased significantly again, and the net profit attributable to the parent company has also increased significantly on the basis of the high base of 2021q1. We believe that the higher than expected growth of the company’s 2022q1 performance, on the one hand, comes from the high vision of the conventional business, on the other hand, thanks to the rapid volume of covid-19 antigen detection kit. In March 11, 2022, New Coronavirus (2019-nCoV) antigen detection kit (GMM) obtained three kinds of certificate of medical device registration in China, becoming China’s first batch of approved COVID-19 antigen detection kits, and rapidly changing the use of self testing. At present, the situation of epidemic prevention and control in China is still grim. Covid-19 antigen detection has the advantage of convenient and rapid detection, and has become an important supplement to covid-19 nucleic acid detection, especially in the covid-19 epidemic in Shanghai since the end of March. According to the annual report, the company sold about 27.6 million covid-19 antigen detection reagents in 2021, mainly for the European market. Considering the high demand and flexibility of the Chinese market and the company’s current sufficient production capacity, we believe that the covid-19 antigen detection reagent business is expected to continue to grow beyond expectations in 2022.
R & D capacity and sales capacity have been greatly improved, laying the foundation for long-term growth. (1) In terms of R & D capacity: in 2021, the company invested 230 million yuan in R & D, a year-on-year increase of 83.47%; The number of R & D personnel increased from 416 in 2020 to 652 in 2021, with a year-on-year increase of 56.73%; The Academy of basic sciences cooperated with the three business departments, with outstanding R & D achievements, a significant increase in the number of SKUs, 62 patents applied for and 30 patents authorized. (2) In terms of sales capacity: the company’s sales team expanded rapidly in 2021, from 520 in 2020 to 972 in 2021, with a year-on-year increase of 86.92%, including nearly 600 sales personnel in the life science division, and gradually established a leading sales network covering the whole market; Further strengthen overseas market sales. In 2021, the overseas sales revenue was 270 million yuan, accounting for 14.49%. The business scope covered Southeast Asia, Europe and South America. The number of employees of the international business department reached 145, of which 28 have been dispatched overseas and started to establish localization teams.
Investment suggestion: we estimate that the company’s operating revenue from 2022 to 2024 will be 2.839 billion, 2.786 billion and 3.072 billion respectively, the net profit attributable to the parent company will be 910 million, 922 million and 1.061 billion respectively, the corresponding EPS will be 2.28 yuan, 2.30 yuan and 2.65 yuan respectively, and the corresponding PE will be 35.4 times, 34.9 times and 30.3 times respectively, giving Buy-A investment rating.
Risk warning: covid-19 epidemic uncertainty risk; Risks of intensified industry competition; The risk of import substitution is less than expected.
