This week, we will discuss the logic of nearshore protein investment of biological research reagents, which is about to IPO
China’s recombinant protein reagent is a pioneer, and the industry development is driving into the fast lane
The company has been deeply engaged in recombinant protein reagent for more than ten years, built a powerful core technology platform in the early stage, and developed more than 7700 kinds of products and service projects based on this, with the coverage in the forefront of domestic production; In recent years, with the gradual growth of the market demand for diagnostic raw materials and mRNA vaccine raw materials, the company has entered a new stage of large-scale production and supply of raw materials.
Thanks to the steady development of the recombinant protein industry and the further boost demand of epidemic prevention and control, the company’s core business has entered a rapid growth period, with a revenue of 341 million yuan in 21 years and a compound growth rate of 136% in three years. The profit side has also turned losses into profits, and the net profit returned to the parent after deduction in 21 years is 149 million yuan; With the expansion of the company’s business scale and the improvement of market recognition, the number of customers continued to increase, and the average order volume increased steadily. This IPO will enhance the industrialization ability of core diagnostic raw materials and innovative diagnostic reagents, and continue to improve the R & D strength in the field of recombinant protein. The market of protein reagents has expanded steadily, and the company’s share is expected to continue to increase. Protein reagents are widely used in scientific research, drug discovery and in vitro diagnostic reagent raw materials. With the growth of China’s biomedical R & D investment and the expansion of IVD terminal market, the scale of China’s protein reagent market is expected to maintain a steady growth trend. In recent years, the quality and performance of domestic reagents have improved rapidly. Under the influence of the epidemic and the international situation, domestic reagents have the advantages of high quality, low price and good service, and the trend of domestic substitution is obvious.
The company is a pioneer of recombinant protein reagents in China, with a comprehensive product layout covering many application fields. Covid-19 epidemic brings diagnostic needs. The sales scale of covid-19 related antigen antibody reagents of the company has increased greatly, and the recognition of customers has improved. In recent years, relying on the professional protein design platform, we have continued to launch new products. Some high barrier products such as organoid culture factors are expected to help the company’s conventional products maintain stable growth.
The accumulation in recent ten years ushered in the harvest period, and the domestic mRNA enzyme leader blue ocean nuggets
MRNA drugs direct protein synthesis through direct control. They are widely used and show great development potential; Covid-19 epidemic promotes the breakthrough of mRNA vaccine technology, and the prospect of mRNA therapy is becoming clearer. Considering the problem of virus mutation and vaccination in China in the short term, there is still broad space for the R & D and sales of domestic covid-19 mRNA vaccine; Medium and long-term preventive vaccines and tumor vaccines will open the market space of mRNA vaccines.
Enzyme is the core composition of mRNA therapy raw materials, and the strong terminal demand drives the high prosperity of enzyme market. As early as 13 years ago, the company prospectively arranged the research and development of mRNA raw material enzymes. At present, it has successfully realized the large-scale production of seven core raw material enzymes. The existing base can support the annual output of 5 billion copies of mRNA vaccine raw materials. The large-scale production capacity of GMP mRNA raw material enzymes ranks first in China; In addition, the company’s mRNA raw material enzyme has reached the advanced level of imported brands in quality control and performance indicators. At present, the company cooperates with domestic covid-19 mRNA vaccine enterprises that have made rapid progress, such as Watson and rivanda. In addition to the short-term commercialization, which will directly bring huge orders, the medium and long-term will form a demonstration effect, which will continue to be beneficial to the business expansion of other mRNA raw materials and enzymes, and the company is expected to form a competitive pattern in which the strong will remain strong.
Related enterprises: nearshore protein (upcoming IPO). Risk tip: customer expansion is less than expected, order volume is less than expected, new product development is less than expected, and price decline is more than expected
Market review: affected by the market, the sector made a sharp correction, and the Chinese patent medicine and API sector fell more. This week (from April 18 to April 22), the biomedical sector fell 7.15%, underperforming the CSI 300 index by 2.96 PCT and the gem index by 0.50 PCT, leading the decline among 30 CITIC primary industries. CITIC pharmaceutical sub sector fell this week, among which proprietary Chinese medicine, chemical APIs and pharmaceutical circulation sectors fell significantly, down 8.77%, 8.00% and 7.80% respectively.
Investment suggestions:
Recent view: high-quality companies have become more and more cost-effective. In the short term, we will continue to suggest two ideas,
Preferred:
1. Rapid growth, continuous improvement of performance and reasonable valuation range.
1) vaccines: Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chongqing Zhifei Biological Products Co.Ltd(300122) and Shenzhen Kangtai Biological Products Co.Ltd(300601) ;
2) oral consumables: Yantai Zhenghai Bio-Tech Co.Ltd(300653) (active biological bone will be approved soon);
3) life related upstream: Jenkem Technology Co.Ltd(688356) (PEG derivative), Nanjing Vazyme Biotech Co.Ltd(688105) (molecular enzyme), Acrobiosystems Co.Ltd(301080) (recombinant protein reagent).
2. Downside risk is limited, waiting for Fundamentals to catalyze.
1) blood products sector (leading enterprises are expected to benefit from the 14th five year plan of pulp stations in many provinces and further open the growth of pulp volume, including Beijing Tiantan Biological Products Corporation Limited(600161) and Hualan Biological Engineering Inc(002007) );
2) pharmacy sector ( Yifeng Pharmacy Chain Co.Ltd(603939) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Lbx Pharmacy Chain Joint Stock Company(603883) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (short-term policy disturbance does not change long-term development logic),
3) private service leaders: haijiya medical, Jinxin reproduction and era Angel;
4) China sublingual desensitization faucet Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) ;
5) China’s leading pharmaceutical glass enterprise Shandong Pharmaceutical Glass Co.Ltd(600529) .
3. Continue to pay attention to covid-19 antigen detection.
1) recommendation: Guangzhou Wondfo Biotech Co.Ltd(300482) , Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047)
Medium and long term perspective: pay attention to the invariance in change and look for opportunities with relative certainty. The impact of centralized mining continues to expand. The opportunity at the investment level lies in that the establishment of centralized mining is based on “multiple enterprises supply mutually replaceable varieties, and the production capacity can be supplied indefinitely in theory”. The basis for enterprises to maintain product price and profit space is the competition pattern, and the dynamic excellent competition pattern lies in the ability to continuously develop products and product iteration, which remains unchanged. Start DRG / Dip reform in 2022. As a means of payment, the core role of DRGs is to achieve a balance between improving the efficiency and quality of diagnosis and treatment and ensuring the sustainability of medical insurance through refined medical insurance management. Hospitals that cannot actively adapt to the rules of the game will be eliminated. The opportunity at the investment level lies in that excellent private medical institutions have paid more attention to cost control for a long time, with higher operation efficiency and competitive advantage.
The general trend of industrial development is: China Meheco Group Co.Ltd(600056) industrial manufacturing is upgraded, the competitiveness is continuously improved, and moves upstream in the global production value chain.
The competitiveness of upstream raw materials is prominent:
1) biological “core” – life science support industrial chain: domestic enterprises have developed rapidly, reagent quality has reached the international leading level, and their competitiveness has been continuously improved. Entering the overseas market through global comparative advantage, China benefits from domestic alternative logic, with high growth and great development potential.
2) IVD raw materials and consumables: covid-19 epidemic opens the window for the transfer of global IVD raw materials and consumables production and supply chain to China. Accelerated internationalization process: with the breakthrough of key technologies of Chinese enterprises, not only the localization rate of the Chinese market is accelerating, but also some high-quality enterprises have the strength to compete with international giants.
1. Manufacturing upgrading of pharmaceutical industry and continuous improvement of Competitiveness:
Upstream: life science support industry chain, IVD raw materials and consumables, related targets: Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047) , Acrobiosystems Co.Ltd(301080) , Suzhou Nanomicro Technology Co.Ltd(688690) ;
High end medical devices: endoscope and sequencer, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Qingdao Novelbeam Technology Co.Ltd(688677) , Sonoscape Medical Corp(300633) , Aohua endoscope, Micro-Tech (Nanjing) Co.Ltd(688029) ; Huada Zhizao (IPO application in progress);
International layout of medical devices, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) ;
Others: Jenkem Technology Co.Ltd(688356) , Shandong Pharmaceutical Glass Co.Ltd(600529) .
2. Pay attention to the supply pattern: blood products, related subjects: Beijing Tiantan Biological Products Corporation Limited(600161) , Boya Bio-Pharmaceutical Group Co.Ltd(300294) and Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) ; Desensitization preparation, related subject matter: Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) .
3. Private medical service sector with differentiated competition. Ophthalmology, Aier Eye Hospital Group Co.Ltd(300015) ; Dentistry, Topchoice Medical Co.Inc(600763) ; Assisted reproduction, Jinxin reproduction; Cancer treatment services, Hagia.
4. Pharmacy sector. Related objects: Yifeng Pharmacy Chain Co.Ltd(603939) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Lbx Pharmacy Chain Joint Stock Company(603883) and Yixintang Pharmaceutical Group Co.Ltd(002727) .
5. Aging and consumption upgrading.
Class II vaccine, related targets: Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) and Changchun Bcht Biotechnology Co(688276) ; Invisible orthodontics, related subjects: Angel of the times;
Risk tips: policy risk, price risk, performance risk less than expected, product R & D risk, expansion progress risk less than expected, medical accident risk, uncertainty of overseas covid-19 virus epidemic, M & A integration risk less than expected, etc.
