In 21 years, the growth rate of conventional income exceeded 50%, and the prosperity of the industry continued to rise. In 2021, the total revenue of the upstream sector of life sciences was 10.697 billion yuan, with a year-on-year increase of 22.97%, of which the revenue of conventional business was 8.746 billion yuan, with a year-on-year increase of 51.48%. Under the multiple negative effects of epidemic disturbance and capacity run in the same period, the sector still achieved high growth. The non attributable net profit deducted by the sector was 2.361 billion yuan, with a year-on-year decrease of 10.29%, mainly due to the decline in the price of covid-19 related business.
From the perspective of sub sectors: 1. In the field of biological reagents, Nanjing Vazyme Biotech Co.Ltd(688105) (+ 19.44%, + 91%, the growth rate of total revenue and conventional revenue, the same below), Sino Biological Inc(301047) (- 39.53%, + 41.41%), Acrobiosystems Co.Ltd(301080) (+ 56.30%, + 70.89%) and other subdivided leaders continuously improve the market share and realize the rapid growth of conventional business by virtue of the industry-leading performance and service advantages; At the same time, thanks to the common technology platform, relevant enterprises have quickly developed products such as enzyme raw materials, antibodies and recombinant proteins for covid-19 virus detection and scientific research, further thickening the company’s performance; Ningwei has achieved rapid development based on its rich brand layout (+ 69.69%). 2. In the field of chemical reagents, Shanghai Titan Scientific Co.Ltd(688133) (+ 56.32%) achieved a significant improvement in performance under the dual wheel drive of independent brands (+ 67.42%) and agent high-end reagents (+ 92.81%), while Shanghai Aladdin Biochemical Technology Co.Ltd(688179) (+ 22.82%) slowed down slightly in the short term due to the adjustment of distribution rebate strategy and the commissioning of CRP system in the second half of 21 years. 3. In the field of scientific research consumables, the industry leader Guangzhou Jet Bio-Filtration Co.Ltd(688026) (+ 69.80%, + 124.23%) accelerated the expansion of customer groups during the epidemic and achieved brilliant results. The scientific research consumables products of Zhejiang Gongdong Medical Technology Co.Ltd(605369) (+ 43.95%) were officially launched in 22q1 and are expected to achieve rapid growth in the future. 4. In the field of sequencing services, the leading company Novogene Co.Ltd(688315) (+ 25.26%) still performed well under the negative interference of overseas epidemic control.
The epidemic situation of 22q1 is repeated, and the sector performance is differentiated. Since the first quarter of 2022, the epidemic situation in East and South China has been repeated, which has hindered product sales and logistics transportation, especially the offline promotion activities for colleges and universities. At the same time, the demand for epidemic products such as covid-19 detection raw materials and consumables has decreased, resulting in the slowdown of the overall growth of the sector. The revenue of 22q1 is RMB 3.105 billion, a year-on-year increase of 19.55%, and the net profit attributable to the parent is RMB 826 million, a year-on-year decrease of 10.83%. From the perspective of branches, we expect that the routine business of Nanjing Vazyme Biotech Co.Ltd(688105) , Acrobiosystems Co.Ltd(301080) and other biological reagent enterprises is expected to continue the previous high growth trend, in which Nanjing Vazyme Biotech Co.Ltd(688105) covid-19 antigen kit contributes most of the current revenue; Shanghai Titan Scientific Co.Ltd(688133) , Shanghai Aladdin Biochemical Technology Co.Ltd(688179) in the field of chemical reagents benefit from the advantages of national warehousing and logistics network, and are relatively limited by the impact of the epidemic; Youningwei, Novogene Co.Ltd(688315) and other targets have a short-term growth decline due to the impact of the epidemic. We expect that the growth rate of relevant targets is expected to rebound in the future with the easing of epidemic prevention and control in China.
The decrease of covid-19 business with high gross profit + price increase of raw materials + freight adjustment and other factors resulted in the short-term decline of profitability. In 2021, the overall period cost rate of the upstream sector of life sciences was 22.74% (+ 2.84pp), of which the sales cost rate was 9.83% (+ 0.84pp), the management cost rate was 6.36% (+ 1.24pp), the R & D cost rate was 6.55% (+ 1.62pp), and the financial cost rate was -0.003% (- 0.87pp). The slight increase in the cost rate was mainly due to the decrease in the demand for covid-19 products and the weakening of the base effect; In 2021, the gross profit margin of the sector was 50.17% (-7.33pp) and the net profit margin was 24.51% (-6.54pp). The decline of gross profit margin was mainly affected by freight adjustment, covid-19 product price fluctuation, upstream bulk raw material price rise and other factors.
Capacity continued to expand, fixed assets and construction in progress accelerated, and there was sufficient reserve of orders on hand. In 2021, the fixed assets of the upstream sector of life sciences totaled 1.740 billion yuan, with a year-on-year increase of 36.93%, the projects under construction (including engineering materials) totaled 567 million yuan, with a year-on-year increase of 67.90%, and the inventory of the sector was 1.646 billion yuan, with a year-on-year increase of 74.10%. After the epidemic, the strong demand of the industry led to the saturation of orders, and the utilization rate of enterprise energy remained high. They have expanded production capacity and facilities to meet the demand of more orders, especially in the field of chemical reagents, Inventory reserve is usually used as the leading indicator of product sales. We expect relevant targets such as Shanghai Titan Scientific Co.Ltd(688133) , Shanghai Aladdin Biochemical Technology Co.Ltd(688179) etc. to continue to perform well in the future.
The number of employees has increased rapidly, and the per capita yield has increased continuously. All nine companies in the sector are listed in 20202021, and are in the stage of rapid development. The pace of personnel recruitment is fast. In 2021, the total number of employees in the upstream sector of life sciences was 10152, with a year-on-year increase of 33.75%. At the same time, the output of employees’ routine business continued to increase, reaching 860000 / person. Under the influence of covid-19 product capacity run and other factors, it still achieved an increase of 13.25%.
The asset liability ratio has been continuously optimized and the asset turnover is in good condition. In 2021, the asset liability ratio of the upstream sector decreased significantly, which was 13.84% (- 7.50%), the turnover rate of accounts receivable was 5.48 times (- 0.61 times), and the inventory turnover rate was 4.11 times (- 0.47 times). The asset turnover was good, and the small fluctuation of turnover capacity was mainly related to the decline in the demand for epidemic related products.
Investment suggestion: the upstream industry of life science has fast growth and high competitive barriers. At the same time, it has certain policy immunity attributes. At present, it is in the stage of rapid demand expansion. In the future, domestic head brands are expected to accelerate import substitution by virtue of multiple advantages such as product performance, technical services and channel network, so as to continue to achieve performance. On the one hand, we continue to recommend companies with strong product R & D capabilities and technical strength, including the Nanjing Vazyme Biotech Co.Ltd(688105) wait.
Risk warning: the product marketing fails to meet the expected risk; Risk of policy change; The public data used in the research report may have the risk of information lag or untimely update; The industry data has been screened and divided to some extent, and there is a risk of deviation from the actual situation of the industry.
