\u3000\u3 Guocheng Mining Co.Ltd(000688) 105 Nanjing Vazyme Biotech Co.Ltd(688105) )
Core view
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company realized revenue of 1.869 billion yuan (+ 19.44%), net profit attributable to parent company of 678 million yuan (- 17.46%), and net profit deducted from non attributable to parent company of 644 million yuan (- 20.90%). In Q1 of 2022, the company realized revenue of 975 million yuan (+ 80.77%), net profit attributable to parent company of 431 million yuan (+ 28.18%), and net profit deducted from non attributable to parent company of 413 million yuan (+ 25.79%).
Comments:
In the past 21 years, non covid-19 business grew rapidly and covid-19 business remained stable. In 2021, the sales revenue of covid-19 related businesses of the company was 1.149 billion yuan (- 3.25%), and the revenue of non covid-19 conventional businesses was 719 million yuan (+ 91%). By strengthening R & D, expanding the number and types of product SKUs and increasing the sales capacity of key cities, the company’s market competitiveness has been continuously enhanced, and the non covid-19 related revenue has continued to grow rapidly. The company’s non covid-19 business revenue has increased from 112 million yuan in 2017 to 719 million yuan in 2021, with an annual compound growth rate of 59.1%. From the perspective of product business revenue splitting, in 2021, the revenue of life science business field, in vitro diagnosis business field and biomedical business field reached 1.339 billion yuan (+ 66%), 433 million yuan (+ 104%) and 97 million yuan (+ 774%) respectively; In addition to covid-19 business, the routine business in the field of life science business and in vitro diagnosis business achieved a revenue of 533 million yuan (+ 66%) and 89 million yuan (104%) respectively. The company’s pillar business life science business is expected to maintain rapid growth under the background of domestic substitution; With the steady growth of the number of registration certificates and the improvement of sales capacity, in vitro diagnosis business helps the company grow in the medium and long term; The biomedical business has achieved from 0 to 1 in 21 years. With the help of the platform advantages of the company’s core raw materials and reagents, as well as the benefits of early customer reserves and recognition for the company’s business expansion, the biomedical business with high potential and high elasticity is expected to become a new growth point of the company’s revenue in the future.
Q1 performance in the year of 22 ushered in explosive growth, which is speculated to be due to covid-19 product sales once again. Q1 company achieved a revenue of 975 million yuan in the year of 22, with a significant increase compared with the same period last month, with + 80.07% / + 68.16% respectively. It is speculated that it is mainly due to the blowout demand for overseas covid-19 detection products caused by the outbreak of overseas Omicron in the beginning of 22. At the same time, the covid-19 antigen detection kit of the company was approved in China in mid March, and a large purchase contract of 215 million yuan was signed with Shangyao medical, which has made a positive contribution to the epidemic prevention in Shanghai and Northeast China in a timely manner. Looking forward to the whole year, covid-19 product revenue is expected to continue to contribute stable cash flow to the company.
The company has maintained a high level of profitability. In the past 21 years, the business has developed rapidly, the cost investment has increased, and the cost rate fluctuated during this period. The gross profit margin of Q1 in 2021 and 2022 was 81.22% (- 10.24pct) and 74.77% (- 17.67%) respectively, and the net profit margin was 36.30% (- 16.22pct) and 44.23% (- 17.90pct) respectively. The gross profit margin and net profit margin fluctuated greatly due to the change of covid-19 product structure and unit price, but still maintained a high profit level. With the rapid expansion of the company’s scale ((- 10 PCT) / 17.5%) and the management cost (+ 10 PCT) / 17.5%), the sales rate is expected to decrease steadily due to the rapid expansion of the company’s scale ((- 10 PCT) / 17.5%) and the subsequent sales rate of 10 PCT + 17.5% / 17.5%). At the same time, the company continues to increase R & D investment, continuously increase the number and types of SKUs, actively expand the R & D team, and increase the R & D personnel to 652 (+ 57%), relying on four core technology platforms: protein oriented transformation and evolution platform, high-performance antibody discovery platform based on single B cells, large-scale multi system heavy histone preparation platform, quantum dot modification coupling and multi index joint inspection technology platform, Around the three application scenarios of “Life Science + in vitro diagnosis + biomedicine”, orderly promote R & D projects in various fields.
Covid-19 products open up overseas markets and actively develop overseas business. In 2021, the company further carried out overseas sales business, achieving sales revenue of 270 million yuan (+ 26.97%), accounting for 14.49% of the total sales revenue, mainly the sales of covid-19 related products. At present, the company has preliminarily completed the channel construction, customer development and team building of the first pilot country in the Southeast Asian market, and has set up three main bodies in Hong Kong, China, Indonesia and the United States. In the future, the company will further improve and optimize the construction of international business team and sales network, focus on the layout in Southeast Asia, Europe, South America and other regions, and further open overseas markets.
Profit forecast and investment suggestions: we expect that from 2022 to 2024, the company’s revenue will be 2715.7/3296.9/3529.6 million yuan respectively, with a year-on-year increase of 45.3% / 21.4% / 7.1% respectively; The net profit attributable to the parent company was 1058.0/1307.0/1480.4 million yuan respectively, with a year-on-year increase of 56.0% / 23.5% / 13.3% respectively. The latest closing price corresponding to PE is 27 / 22 / 20 times respectively. Relying on the key common technology platform independently established, the company has successively entered the business fields of biological reagent and in vitro diagnosis, and can carry out the research and development of antibody drugs. It is one of the few R & D innovative enterprises in China with independent and controllable upstream technology development capacity and terminal product production capacity. It is covered for the first time and is rated as “buy”.
Risk warning: the uncertainty of covid-19 product sales caused by the uncertainty of covid-19 epidemic situation; Customer churn; Sales are less than expected; New product development is not as expected; Overseas business expansion is less than expected; The gross profit margin of products fell.
