Per AI Express, on December 28, 2023, Zheshang** released a research report commenting on Jinyu Medical (603882).
Jinyu Medical is a leading independent medical laboratory (ICL) leading enterprise in China in terms of the number of chain laboratories, the breadth of coverage area, and the number of customers served. From 2020 to 2022, the company entered a stage of rapid development relying on the new crown testing business, and at the same time took this opportunity to continue to increase investment in assets and R&D, rapidly expand service projects and improve service capabilities. We believe that the company has entered a new growth cycle with the recovery of demand for routine testing in 2023 and the clearing of the new crown business base.
Performance review: The new crown base has been cleared, and the continuous improvement of service capabilities and efficiency has pushed the performance into a new growth cycle.
In terms of revenue and profit: As a leading enterprise in IVD testing services, the company's performance growth is closely related to the changes in the industry's testing demand. From 2020 to 2022, driven by the new crown testing business, the company's operating income and net profit attributable to the parent company CAGR increased from 178% and 333% (2016-2019) increased rapidly to 432% and 898%。Considering that during the period from 2020 to 2022, the company was affected by the rapid growth of the new crown testing business, and its service items, service efficiency, number of outlets, hardware equipment, and carrying capacity have been comprehensively improved across the country, which is expected to promote the company's routine testing to enter a new growth stage. In the context of the accelerated development of the ICL industry and the continuous improvement of the company's operational efficiency, looking forward to 2024-2025, we believe that the growth rate of the company's operating income and net profit attributable to the parent company is expected to be faster than the pre-COVID level, and the CAGR is expected to reach 206%，44.8%。
In terms of operating capacity, if the impact of unexpected factors such as the new crown is not considered, the company's net operating cycle is significantly better than that of comparable companies in the industry, which reflects the company's ability to improve operational efficiency due to the scale effect. We believe that since 2023, with the clearing of the new crown testing business and the digestion of the base, the company has entered a new cycle of continuous improvement in operational efficiency (since 2022Q4, the company's accounts receivable have ushered in a positive trend;In 2023Q3, the company's fixed asset turnover rate has been higher than the level of the same period in 2019Q3), and the operating capacity is expected to quickly recover to the high level in 2019.
ICL market: large expansion space and low penetration rate.
Market size: According to Frost & Sullivan data, the market size in 2021 will be about 22.3 billion yuan, and the CAGR is expected to be 18 from 2021 to 20262%。Compared with the general inspection, the growth rate of special inspection is faster and the development space is broader, and the CAGR is expected to be 23% from 2021 to 2026.
Competitive landscape: The market concentration is high, and Jinyu Medical has the largest market share, which will be about 29 in 20214%。In the context of the ICL industry's competition in laboratory network, coverage of testing items, service timeliness and accuracy, etc., the first-mover advantage and scale advantage of leading enterprises are more obvious, and it is difficult for late entrants to break the existing pattern.
Low penetration: Despite the rapid growth of China's ICL market, it is still in its infancy compared with other developed countries. In 2021, the penetration rate of ICL in China is only about 6%, far lower than 60% in Japan, 44% in Germany and 35% in the United States, and there is still broad room for expansion.
Growth drivers: Excellent cost-effectiveness, increased outsourcing demand and favorable policies continue to promote China's ICL industry to enter a stage of rapid development.
Jinyu Medical: We believe that the company's competitive advantage and marginal changes are mainly reflected in the following four aspects:
The company has the advantage of integrating multi-technology platforms that connect with international and leading peers: as of 2022, the company has cooperated with more than 170 institutions. It has established all-round, wide-coverage and diversified cooperation with 101 colleges and universities in talent training, technology development, transformation of scientific and technological achievements, and discipline construction. We believe that as a pioneer in the field of ICL in China, the company's accumulated customer stickiness and multi-technology platform integration advantages in the field of industry, education and research are expected to help the company continue to maintain its leading position in the industry.
Accelerated product innovation and project expansion to drive growth: Since 2020, the company has continued to increase its investment in R&D during the rapid growth of revenue and profits brought by COVID-19 testing, and the number of service items and the expansion of disease insurance have ushered in accelerated development, driving the high growth of routine testing project revenue.
In 2023, the company will focus on promoting 25 digital projects, and has achieved phased results in marketing digitalization, laboratory digitalization, logistics digitalization, first-chain digitalization and digital innovation business. In addition, the company continues to build an informatization, automation, and intelligent laboratory operation management system, and the operational efficiency has been significantly improved.
In 2022, the company added more than 20 new testing centers, and further strengthened the testing and service capabilities of the laboratory. The proportion of the company's special inspection business and the revenue of tertiary hospitals has continued to increase for five consecutive years.
Earnings** and valuations.
We expect that from 2023 to 2025, the company's total operating income will be0 billion yuan, the year-on-year growth rate was .8%。The net profit attributable to the parent company was600 million yuan, the year-on-year growth rate was .8%, corresponding to PE are ., respectively3 times. Considering that the company is in an absolute leading position in the ICL field, its revenue and profit growth rate and operating capacity have entered a new upward cycle, referring to the relative valuation of comparable companies, it is covered for the first time and given an "overweight" rating.
Risk Warning. Policy risk, market risk, quality risk, capital risk, technology risk, etc.
*: Huibo Investment Research).
Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Do so at your own risk.
Edited by Tsang Kin-fai).
National Business Daily.