[Dry goods] Meikang biological depth research report: the IVD industry chain leader looming under the medical examination era
At the end of April 2015, when Meikang Biotech entered the A-share GEM, we wrote the first in-depth research report of Meikang Bio-Marketing Market, “Meikang Bio: All-weather Service Provider of Medical Laboratoryâ€, and has been tracking the company so far. During the period, a number of large and small listed companies research and telephone exchange meetings were organized and a series of research reports were written. Today, the IVD industry, especially the channels and terminals, have undergone a large degree of change; after the listing of Meikang Biotech, the fundamentals have also undergone tremendous changes with the help of the capital market (continuously extending downstream, fully deploying channels and service terminals) .
To this end, we have written the second in-depth report of Meikang Bio. This report is systematically adopted through five levels and five dimensions (ie, corporate governance level, company management level, industry trend level, strategic planning level, and strategic execution level). Carding the current stage and future development trends of the company and IVD industry. In the spirit of modesty, we sincerely hope to communicate and discuss with investors and industry players.
Core point of view:
Corporate governance level: private IVD companies with concentrated equity and strong execution
After the extensive development of the domestic IVD industry in the early years, it has entered the period of industrial integration. In the context of industrial integration, what kind of enterprises will stand out, we believe that: corporate governance structure and entrepreneurial spirit, that is, the human level, is the core factor that determines whether enterprises can stand out and stand out. In this process, factors such as high concentration of equity, strong entrepreneurial talent and professional background are more conducive to the top-level design and strategic implementation of the strategic level of the enterprise. Meikang Bio clearly meets the above conditions.
The company's management level: efficient and flexible city-level sales platform equipped with increasingly rich product lines; full deployment of terminal medical inspection services
Meikang's marketing network adopts a prefecture-level dealer system. At present, the number of city-level dealers in more than 30 province-level regions has grown from 600 before the listing to more than 900 at present. The company's national sales platform has been completed. In terms of product line layout, the company's biochemical business grew steadily, POCT products are in the heavy volume stage, and self-produced chemiluminescence products are expected to be launched in 2017. At present, we are constructing a comprehensive service platform that integrates routine testing, pathological testing, genetic testing and other tests with Sidley medical examination as the core.
Industry trend level: demand side, far from being satisfied, ceiling is still far; supply side, intensive supply mode is being “confirmedâ€
Demand side: In 2016, China's IVD industry is about 7 billion US dollars (from the production end, not including channels and terminals). In the future, the scale of 2020 or more than RMB 85 billion will correspond to a compound annual growth rate of approximately 18%, and the growth momentum will remain strong. Supply end: Under the medical inspection intensive supply mode: the labor and material costs invested by medical institutions in inspection will be significantly reduced, and the overall inspection technology and management operation level can be quickly improved, fully complying with the current medical insurance control fee Industry trends in cost and efficiency.
Strategic planning level: IVD's entire industry chain layout strategy is clear, scarcity highlights investment value
The market space for IVD channel circulation is about 110 billion yuan. The medical inspection income accounts for 10% of the total hospital revenue, and the terminal inspection service corresponds to a market space of 260 billion yuan. In the current domestic capital market, Meikang Bio is the only IVD company that has layout from upstream IVD raw materials to terminal inspection services (in addition to strengthening R&D in recent years, vigorously deploying terminal inspection services), compared with other domestic IVD companies. The theoretical market space of the pair is broader, and it is the scarcity standard of the current A-share IVD industrial chain layout.
Strategic implementation level: “Sunshine 100†strategy is landing, integrating local resources, expanding intensive supply and regional medical inspection center
After the company's listing, it has integrated IVD channel dealers in Beijing, Zhengzhou, Anhui, Jiangxi, etc., and relied on the medical resources accumulated by the agents in the local area for a long time, inspecting and intensive supply (packaging) of local hospitals, and at the local government level. Promote the construction of regional medical inspection centers. Usually, a district-level inspection center is invested about 20 million yuan. The company and the original hospital take 5/5 of the inspection income. The cost (reagents, equipment supply, inspection staff salary, etc.) is borne by the company. The recycling cost cycle is 2 Years, significantly shorter than the traditional out-of-hospital independent medical laboratory for 4-5 years. We expect that with the continuous maturity of the company's overall inspection service business and the expansion of scale effect, the Meikang Regional Medical Testing Center is expected to generate 50 million yuan of revenue per year under steady state, and the corresponding net profit of the monomer is expected to reach 800- 10 million yuan.
Earnings forecast and investment rating
Regardless of the company's further implementation of outreach mergers and acquisitions, we expect the company's EPS for 16-18 years to be 0.57/0.72/0.91 yuan, respectively, corresponding to 66/53/41 times for PE. The company is the only IVD company that is listed on the current A-share market from IVD upstream raw materials, product R&D and production, to channel integration and terminal service layout. It is a scarce target, and the strategic path of integrating channels and terminals is clear and feasible, and it is expected to enjoy the valuation premium. Although the short-term valuation is slightly higher than the overall level of the IVD sector, considering the company's extended M&A expectations and strong strategic execution, the short-term valuation is slightly higher and does not hinder the long-term investment value. It is still recommended and given a “Buy†rating.
risk warning
Systematic risk in the A-share market. The overall valuation center of the IVD sector moved down. The growth of traditional biochemical business has slowed down. Risk of core technology and business backbone loss. There is some uncertainty in the process of integrating dealers. The terminal inspection center layout progress was lower than expected.
profit prediction:
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HANGZHOU DIAN BIOTECHNOLOGY CO., LTD. , https://www.dianbiotech.com