\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 047 Sino Biological Inc(301047) )
Covid-19 business declined significantly, while non covid-19 business maintained steady growth
On April 28, 2022, Sino Biological Inc(301047) released the first quarter report of 2022. In 2022q1, the operating revenue reached 176 million yuan, a year-on-year decrease of 61.49% and a month on month increase of 15.44% over 2021q4; The net profit attributable to the parent company was 114 million yuan, a year-on-year decrease of 65.61%; The net profit attributable to the parent company after deduction was 93.81 million yuan, a year-on-year decrease of 70.90%. The main reason for the decline of the company’s performance is that covid-19 virus related businesses are affected by epidemic changes, prevention and control policies, market competition and other factors; Non covid-19 virus related business revenue continued to grow in 2022q1. In terms of profitability, the gross profit margin of the company in 2022q1 was 89.85% (-6.78pct) and the net profit margin was 64.97% (-7.79pct). The decline of covid-19 business with high gross profit caused the decline of overall profitability. Based on the characteristics of the industry and the needs of end customers, we are optimistic about the long-term development of the platform company that can provide a variety of biological reagent product lines and a rich number of varieties, and maintain the original profit forecast. It is estimated that the net profit attributable to the parent company will be 516 / 455 / 525 million yuan and EPS will be 4.00 / 3.52 / 4.06 yuan from 2022 to 2024. The current share price corresponds to 28.0 / 31.8 / 27.6 times of PE, maintaining the “overweight” rating.
Continue to increase R & D investment, and the prototype of “one-stop” biological reagent platform has emerged
2022q1 invested 40.13 million yuan in R & D, with a year-on-year increase of 42.97%. We continue to increase R & D investment. We expect that the main investment directions are recombinant protein, immunodiagnostic antigen raw materials, molecular biology tool enzymes, nano antibodies, phosphorylated monoclonal antibodies, etc. Relying on the independent closed-loop biotechnology platform, the company has developed a complete product line of recombinant protein, antibody, gene and culture medium to meet the diversified needs of downstream customers of biological reagents. At the same time, Sino Biological Inc(301047) deeply excavates the value of the technology platform and lays out the cro business. We expect that the cro business in 2022q1 will continue to grow rapidly.
Continuously improve the market expansion ability and improve the global sales network
In 2022q1, the company’s sales expenses were 29.15 million, with a year-on-year increase of 43.93%. The rapid growth of sales expenses was mainly due to the rapid expansion of market development personnel and the increase of corresponding expenses. At the same time, it has set up a subsidiary in Japan to be responsible for the sales of biological reagents in Japan and South Korea, improve the layout of the company’s global marketing network, and set up local customer service and logistics centers in the west coast of the United States, European developed countries, Japan and South Korea and other regions with active foreign demand, so as to lay the foundation for the company’s overseas market expansion.
Risk warning: covid-19 business decline exceeded expectations, core technical personnel lost, and overseas market promotion was less than expected
