A paper order, Andon Health Co.Ltd(002432) (002432. SZ) share price was “detonated” again. On January 14, Andon Health Co.Ltd(002432) “one word limit” closed at 75. 28 yuan / share, another record high. The company’s share price rose more than 440% last year and 51% this year. 93%。
Before trading on January 14, Andon Health Co.Ltd(002432) announced that its subsidiary ihealth labs Inc (hereinafter referred to as the U.S. subsidiary) has signed a procurement contract with the U.S. ACC (U.S. Army contracting command) on January 13, 2022 local time and came into force.
According to the disclosure, American ACC represents HHS (United States Department of health and human services) as the contract purchaser, which is the administrative department of the federal government, that is, the largest health security agency of the federal government.
The contract far exceeded expectations, which is the reason why Andon Health Co.Ltd(002432) soared again. The contract content shows that the total amount of contract price and tax is as high as 12. $7.5 billion, or 81. RMB 0.2 billion. This figure is much higher than that of Andon Health Co.Ltd(002432) 2020 and the first three quarters of 2021. 0.8 billion yuan and 7. 9 billion yuan.
Since the fourth quarter of 2020, Andon Health Co.Ltd(002432) orders on hand have been increasing. As of January 13 this year, the cumulative amount of orders and contracts between the U.S. subsidiary and the New York State Department of health was equivalent to RMB 11. 8 billion yuan; The cumulative amount of orders and contracts with the Executive Office of the Federal Department of health and human services in Massachusetts is equivalent to RMB 9. 4.4 billion yuan. In addition to the latest contract of RMB 8.1 billion, the recently Andon Health Co.Ltd(002432) added contract amount exceeds RMB 10 billion.
The new order products are mainly antigen self-test kit products. According to the disclosure, on November 6, 2021, Andon Health Co.Ltd(002432) said that its U.S. subsidiary covid-19 antigen home self-test OTC kit was authorized by the U.S. FDA. At present, there are 11 such kit products approved in the U.S. market.
Photo source: reply to the notice of attention letter of Shenzhen Stock Exchange on Andon Health Co.Ltd(002432) November 30, 2021
Price and capacity are the reasons why Andon Health Co.Ltd(002432) can win contracts and orders. According to the announcement of Andon Health Co.Ltd(002432) replying to the attention letter of Shenzhen Stock Exchange on November 30 last year, the average price of each product is lower than that of similar products, and Abbott and other companies have been out of stock.
Antigen self-test kit products are mainly used for covid-19 virus detection, and the large increase in demand is related to the significant increase in covid-19 cases in the United States. According to the plan released by the White House last September, it includes the following measures: Investing US $2 billion in the future, providing 280 million covid-19 rapid self-test kits, and adding test points in 10000 pharmacies on the existing basis.
The surge in orders is bound to test Andon Health Co.Ltd(002432) existing capacity. The “8.1 billion” contract stipulates that the U.S. subsidiary will deliver 25 million copies on the 10th day of signing the contract, 100 million copies on the 30th day, and complete all deliveries within 60 days. Previously, the contract between the U.S. subsidiary and the New York State Department of health showed that the weekly delivery volume was 1.5 million sets – two people, that is, 12 million people per month.
This means that during the peak period of orders, the demand delivery volume of U.S. subsidiaries is at least 112 million person copies / month. According to the announcement of the above reply to the letter of concern of Shenzhen Stock Exchange, Andon Health Co.Ltd(002432) currently has a monthly production capacity of 100 million people. It is estimated that by the beginning of 2022, the production capacity will increase to 200 million people per month. Therefore, Andon Health Co.Ltd(002432) production expansion progress and actual delivery volume are still uncertain.
Delivery volume fluctuations may threaten the order itself. According to the terms of the “8.1 billion” contract, the U.S. government has the right to terminate the contract at any time due to its own factors or the supplier’s fault. In the announcement, Andon Health Co.Ltd(002432) also clearly gave this risk warning.
As for the total return of more than 10 billion yuan of orders and contracts, there are more unknowns. Currently Andon Health Co.Ltd(002432) holds 70.46% of the shares of the U.S. subsidiary. According to the semi annual report of 2021, the gross profit margin of ihealth series, intelligent IOT and consumer products business is only 38. 54%, a significant year-on-year decrease of 31. 15%。
The reason for the sharp decline in the gross profit margin of this business is that the sales prices of epidemic materials and products follow the market, and the gross profit margin is lower than that in the epidemic period. If the gross profit margin of the business can rise to 70% in 2022, when the existing orders are completed, Andon Health Co.Ltd(002432) can increase the gross profit by 7 billion yuan.
Considering the business attribute of Andon Health Co.Ltd(002432) , it is inevitable to follow the market and cycle fluctuations, and the soaring performance is difficult to continue. At present, there is a lot of “water” of optimism in the market value of Andon Health Co.Ltd(002432) 36 billion.
