\u3000\u3 Guocheng Mining Co.Ltd(000688) 363 Bloomage Biotechnology Corporation Limited(688363) )
Recently, the company released the first quarter report of 2022. During the reporting period, the company’s revenue, net profit attributable to the parent and net profit deducted from non attributable to the parent increased by 61.57% / 31.07% / 31.21% year-on-year respectively. In 2021, the company’s revenue, net profit attributable to the parent and net profit deducted from non attributable to the parent increased by 87.93% / 21.13% / 16.74% year-on-year respectively. The performance growth exceeded expectations, mainly due to the continuous growth of the company’s sales revenue of functional skin care products and its online efforts.
2022q1 performance growth exceeded expectations, with functional skin care products as the main driving force.
In 2022q1, the company’s revenue was 1.255 billion yuan, with a year-on-year increase of 61.57%, mainly due to the significant increase in the revenue of functional skin care products, with a year-on-year increase of 146.57%, coupled with the help of online channels. The net profit attributable to the parent company was 199 million yuan, with a year-on-year increase of 31.07%; The net cash flow from operating activities was – 217 million yuan, mainly due to the payment of accounts payable and employee compensation payable at the end of the previous year and the increase of expenses paid in the current period due to the increase of sales revenue; The total R & D investment was 81 million yuan, with a year-on-year increase of 109.24%, and the proportion in operating revenue increased by 1.84 PCTs to 6.49%, mainly due to the increase of equity incentive expenses, direct R & D investment and outsourcing R & D expenses.
In 2021, the revenue increased by 87.93% year-on-year, and the functional skin care products business performed well.
In 2021, the company achieved an operating revenue of 4.948 billion yuan, with a year-on-year increase of 87.93% and a comprehensive gross profit margin of 78.06%; The net profit attributable to the parent company was 782 million yuan, a year-on-year increase of 21.13%; Net profit after deduction of non return to parent was 663 million yuan, with a year-on-year increase of 16.74%. The main reason is that the market development has been strengthened, the single products have been launched continuously, the online customer volume has continued to grow, and the distribution income of cooperation with various channels has also achieved a high growth.
Split by business: 1) the revenue of raw material products was 905 million yuan, with a year-on-year increase of 28.62%, accounting for 18.29% of the company’s main business revenue, and the overall gross profit margin was 72.19%, of which the gross profit margin of pharmaceutical grade hyaluronic acid raw materials was the highest, 87%. 2) The revenue of medical terminal products was 700 million yuan, with a year-on-year increase of 21.54%, accounting for 14.15% of the company’s main business revenue; The gross profit margin was 82.05%, of which the revenue of skin medical products was 504 million yuan, a year-on-year increase of 15.88%, mainly due to the expansion of medical products and favorable policies; Orthopaedic injection products achieved a revenue of 123 million yuan, a year-on-year increase of 37.08%. 3) The revenue of functional skin care products was 3.319 billion yuan, with a year-on-year increase of 146.57%, mainly due to the continuous updating of products by sub brands relying on leading R & D strength to meet the needs of consumer segmentation. The gross profit margin was 78.98%, with a year-on-year decrease of 2.90 PCTs, mainly due to the inclusion of transportation expenses in operating costs in 2021.
Enter the collagen industry and improve the business structure.
Recently, the company acquired 51% equity of Yierkang and officially entered the collagen industry. Collagen is widely used, including wound dressings, hemostatic materials and filling materials in the field of medicine; Moisturizing, biological nutrition and whitening functions in the field of skin care; Artificial collagen casings in the field of food. With the favorable policies and the increase of residents’ medical and health expenditure, the collagen market has huge growth space, and will be more widely used in hospitals and medical and aesthetic institutions.
Yierkang has been deeply engaged in the field of collagen for 23 years. Its main products include collagen sponge and artificial bone. Its leading products have won the title of “national key new products” and have been listed in the innovation fund project for small and medium-sized enterprises of the Ministry of science and technology. Among them, collagen sponge has a high market share, accounting for more than 30% of market sales, and has always been in a leading position in the industry. In 2019, 2020 and January November 2021, the company achieved revenue of 872525 million yuan, 792855 million yuan and 756798 million yuan respectively; The net profit is 248065 million yuan, 109706 million yuan and 130914 million yuan. As of November 30, 2021, the total assets of the company are 113 million yuan.
The acquisition is of great significance. It not only enriches Bloomage Biotechnology Corporation Limited(688363) ‘s product line and forms a good matrix of medical end products, but also actively integrates the business with Yierkang, and cooperates in R & D and production capacity, so as to promote the further development of the company in the field of collagen raw materials.
Investment suggestion: we expect the operating revenue of the company from 2022 to 2024 to be 6.975 billion yuan, 9.22 billion yuan and 11.837 billion yuan respectively, and the net profit attributable to the parent company to be 1.091 billion yuan, 1.379 billion yuan and 1.775 billion yuan, corresponding to PE of 51.27x, 40.57x and 31.52x. Give a “buy” rating.
Risk tip: the risk of new product R & D and registration, the lower market consumption intention and the loss of core technicians.
