\u3000\u3 Guocheng Mining Co.Ltd(000688) 133 Shanghai Titan Scientific Co.Ltd(688133) )
The upstream scientific research reagent industry is in a period of rapid growth and is optimistic about the development model of platform service providers. China’s upstream scientific research reagent industry is in the best era: 1) with increasing investment in innovation and R & D, it has become a consensus for the long-term, healthy and stable development of the industry. As a basic tool for innovation and R & D, scientific research reagents are enjoying the dividends brought by the rapid growth of downstream demand. In 2020, China invested 2.4 trillion yuan in research and experimental development, an increase of 10.2% over the previous year, and one-stop scientific research reagent platform service providers are rising rapidly; 2) Affected by the epidemic, the independent and controllable trend of the industrial chain is strengthened, and the domestic substitution of upstream scientific research reagents is ongoing. We believe that in the early stage, platform service providers can quickly bind customers and cultivate customers’ use habits after forming product matrix advantages through agency + self research. Then, based on a stable customer base, when the company carries out horizontal expansion, it can quickly cut into new segments with relatively low customer acquisition cost. At the same time, the expansion of business areas will also be positively transmitted to customers’ use experience and form a good two-way positive feedback.
The company is one of the leading platform service providers in China. Its own brand income accounts for a relatively high proportion and has long-term investment value. 1) Through its own products + agent products, the company has sold more than 3.5 million product SKUs by 2021, with an extremely rich product matrix. Its business fields include scientific research reagents, laboratory instruments, experimental consumables and other fields; 2) As a leading comprehensive service provider of scientific research reagents in China, the company has improved customers’ purchase experience and continuously strengthened customers’ stickiness through self built professional and intelligent warehouse management and logistics system and efficient information management system; 3) We have continued to strengthen the construction of independent brands, and the technical level of some of our own products has reached the leading foreign standards. At the same time, we have invested in the research and development of biological reagents and the establishment of brands (adamaslife). In recent years, the income of independent products (including laboratory construction and scientific research information services) accounts for more than 50%.
The upstream and downstream of the industrial chain are continuously arranged, and the ceiling of long-term growth continues to open. The compound growth rate of the income end is expected to exceed 35% in the next three years. The layout of the company has been relatively clear in many aspects: 1) at the end of the industrial chain: continuous horizontal and vertical expansion. The company has accelerated the integration of the industrial chain in recent two years, and expanded its business extension from the upstream production and manufacturing end to the category of scientific research reagents and scientific research instruments. At the manufacturing end, through the acquisition and investment of raw material suppliers, OEM manufacturers and self built industrial R & D platforms; In addition, it also invested in experimental instruments, detection and other targets, and expanded its business field horizontally; In the field of reagents, the company’s production capacity has also been greatly improved to realize the independent and controllable production of scientific research reagent raw materials, so as to lay the foundation for entering the industrial end in the future; 2) At the end of product category: continuously enrich the product matrix, strengthen independent research and development on the one hand, and continuously introduce third-party brands in biomedicine, analysis and testing and other fields, and strengthen cooperation with imported brands, so as to achieve rapid growth in the number of SKUs; 3) At the warehousing and logistics end: the company has initially established a complete warehousing and logistics system for national general warehouse, regional central warehouse, urban service warehouse and customer front warehouse, and has realized local warehousing and self delivery services in 23 cities. We expect that with the continuous expansion of the company’s business areas, the ceiling of the company’s business revenue will continue to open, and the growth rate of revenue from 2021 to 2024 is expected to exceed 35%.
Release the fixed growth plan and gradually keep up with semefi in the future. At the beginning of 2022, the company issued a fixed increase plan and planned to build a “functional platform for scientific service R & D transformation”, which will carry out large-scale production and production process improvement according to the process route. The R & D contents include high-end instruments and equipment and components such as mass spectrometer and chromatograph, as well as high-end biological reagents such as special serum and culture medium, and further cultivate the R & D and industrialization of high-end reagents and instruments such as biological reagents required for cutting-edge scientific research, Focus on solving the problems of high-end scientific research reagents, precision instruments and equipment highly dependent on imports and weak local manufacturing capacity. We believe that from the perspective of the positioning of “scientific service R & D and transformation functional platform”, the company will develop towards chemical reagents, biological reagents and high-end scientific research instruments. The comprehensive service provider of one-stop scientific research services will be more and more comprehensive, and will gradually catch up with semefi in the future.
Profit forecast. We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 200 / 29 / 410 million respectively, with a corresponding growth rate of 39.4% / 44.9% / 41.9%, corresponding to 56 / 38 / 27 times the current market value of PE. As a leading comprehensive service provider of scientific research reagents in China, the company is rapidly expanding upstream and downstream of the industrial chain. At the same time, it is also increasing the layout in terms of intelligent warehousing and logistics. The ceiling of the company’s long-term growth is constantly opened, covered for the first time, and given a “buy” rating.
Risk warning: the risk of intensified market competition; The risk that the business expansion is less than expected; The risk that the regional expansion is less than expected.
