All of the content in this article is a case of industrial research and company research, does not constitute any investment advice, does not constitute any investment recommendation. There are also three other points worth noting:
1. Short-term price fluctuations are almost unpredictable. However, the market is full of god predictions driven by huge profits.
2. Even the best business has a risk of failure if the fundamentals change drastically.
3. Good companies that are overvalued are also at risk of a long-term pullback as liquidity tightens and if profit growth does not meet expectations.
Risk Tips:
Both companies are due to the epidemic caused by the increase in demand for vaccine production equipment and orders, performance rise. If the supply of vaccine capacity exceeds demand in the future, the company's orders may decline and performance may fall.
The basic situation of Dongfulong and Chutian Science and Technology has been told in the previous article: Pharmaceutical Equipment Dragon - Dongfulong and Chutian Science and Technology
Today, let's take a look at the two companies' midterm reports.
First, the financial situation of the report
Dongfulong:
Chutian Technology:
Comparison Analysis:
In terms of the size of the revenue, Chutian Technology reported 23% of the total revenue. On the scale of revenue, Chutian Technology reported 2.3 billion revenue higher than the 1.8 billion of Dongfulong. In terms of revenue growth rate, Chutian Technology year-on-year growth of 72.75%, higher than the 52.22% of Dongfulong.
But on the scale of net profit, Dongfulong created 340 million profit, of which the non-deductible profit of nearly 300 million; while Chutian Technology only created 236 million net profit, of which the non-deductible net profit of 235 million. In the net profit and non-deductible net profit growth rate, because Chutian technology base is lower, the growth rate is faster. Chutian science and technology net profit and deducted net profit increased by 13.2 times, 70.27 times. Dongfulong also performed well, net profit and non-net profit growth of 97.74%, 125.41%.
In the indicator that can measure the quality of earnings - net operating cash flow, Chutian technology is better. Net operating cash flow of 804 million in the first half of the year, higher than the 595 million of Dongfulong.
In the core investment indicators - weighted return on net assets, it is the East Dragon continues to lead, half a year as high as 9.02%, higher than the 7.52% of Chutian Technology.
Second, the highlights of the report:
Dongfulong:
Dongfulong medical science and technology in the form of industrial investment, focusing on the research and development of front-end technology in the pharmaceutical and medical industries. In the field of cell therapy, provide overall solutions for the preparation and production of immune cells, stem cells, tumor cell vaccines, gene drugs, etc.; in the field of biopharmaceutical consumables, accelerate the strategic layout through self-research, mergers and acquisitions, etc.; in the field of biosample library, research and development of automated sample storage and management system, provide cellular and tissue sample library overall solution;
Pharmaceutical equipment product diversification layout results show, injectables, solid preparations , biomolecules, cellular equipment and other areas of the product in the reporting period of steady growth, which benefited from the antibody, vaccines and other biomolecules of the global development trend and capacity building, the company's bio-primary liquid related equipment Access to more domestic and international market opportunities, biological macromolecule equipment to improve the overall solution capacity, the report period biological engineering stand-alone and system revenue of 40,043.93 million yuan, accounting for 22.13% of the company's operating income, compared with the same period last year, an increase of 602.40%.
Chutian Technology:
Business planning: focus on the development of biopharmaceutical technology products business. Especially biopharmaceutical front-end bioreactor and its disposable technology (SUT) products, consumables, packaging materials, excipients and so on.
In terms of biopharmaceutical production front-end equipment, benchmarking Sartorius. Has set up a holding subsidiary Chutian SUT (SUT) Biotechnology Co. Specializing in the production and sale of biopharmaceutical disposable technology products. Such as bioreactor disposable bags, liquid dispensing bags, liquid storage bags, breathing bags and their membrane materials. The technical team comes from the technical talents who have been working in similar enterprises abroad for many years and the production technology (MTS) and quality control personnel of domestic biopharmaceutical head enterprises.
The integration of the company's headquarter with ROMACO of Germany has been further strengthened, and the concept of Made in Germany is y rooted in people's hearts. At the same time, Chutian Huaxing's scale of operation has been expanding, assuming the company's important processing heavy responsibility. Core parts processing technology and level of steady improvement, and further promote the company's product quality.
The company's R&D investment in the first half of the year reached 197 million, and is struggling to catch up with the front row players.
Third, the risk of disclosure and countermeasures:
Chutian Science and Technology:
(1) the company in recent years in the field of bioengineering related to the larger investment in the future of biopharmaceuticals related to the equipment, consumables, process systems, etc., will become an important part of the company's performance contribution. At present, the biological front-end biological disposable reactor, consumables, etc. has completed the layout, is expected to launch some products during the year. Fillers, media, etc. are being laid out, in order to become a total solution provider in the field of biology in the future. However, the degree of customer acceptance and market development of products such as SUT may not meet expectations.
As the filler, media and other products are newly developed products, and the company's existing products are more different, if you rely on existing technical staff, may not be able to meet the expectations of new product development.
Response: The company continues to increase investment in research and development, and actively layout biological front-end related products. We have introduced industry experts to form our own product development team. As of the date of disclosure of this report, disposable related core team members have gradually joined Chutian , and according to the company's strategy to promote the implementation of the product, strive to complete within this year, WAVE reactor, liquid storage bags and other parts of the product landing , and continue to promote the disposable reactor, membrane materials and other product development and landing.
(2) 2020 new crown epidemic spread globally, domestic and foreign new crown vaccine demand surge, to the pharmaceutical equipment industry has brought incremental. At the same time, due to the long production cycle of foreign vaccine equipment manufacturers, and other reasons, can not meet the needs of domestic vaccine manufacturers. Chutian Technology, as one of the leading pharmaceutical equipment companies in China, has provided a large number of key equipment for vaccine production for China Vaccine Group, Zhifei Longkoma, Kangxinuo and other vaccine companies between 2020 and the period of this report. Subsequent to the decline in demand for new crown vaccine equipment, if other products can not fill the growth space in a timely manner, may cause the risk of performance decline.
Response: During the reporting period, we accelerated the progress of new product development and upgrading of old products to further broaden the product chain. Accelerated the biological product line, disposable consumables and other related areas of product layout. At the same time, using the opportunity of the new crown epidemic, strengthened the vaccine market and other high-end customers in the field of development, the company's products gradually launched to the high-end vaccine market, innovative drug companies , to further enhance the company's market influence.
(3) According to Chutian Technology merger and acquisition of ROMACO, Chutian Investment and the company signed the "Performance Commitment Compensation Agreement", Romaco in 2020, 2021 and 2022 years the number of years of the projected net profit of each year, respectively, not less than 7 million euros, 8.1 million euros and 9 million euros. Since the beginning of 2020, the New Crown outbreak has spread to several countries and regions around the world, impacting the global economy. The uncontrollable impact of the New Crown Epidemic may adversely affect ROMACO's performance, resulting in the risk that the performance commitments will not be met.
Response: During the reporting period, ROMACO further strengthened its market development by opening up online showrooms and other forms of sales. At the same time, through the integration with the headquarters, the operating situation continued to improve, orders, delivery and other capabilities have been improved, the new plant in Bologna, Italy, was put into use, which solved the Group's production capacity problems.
Fourth, the shareholders update:
Dongfulong top ten shareholders and the top ten liquid shareholders:
Trump Technology top ten shareholders and the top ten liquid shareholders:
V, Research Summary Highlights
Dongfulong
In the medical equipment and consumables segment, the company around the downstream cell therapy drug companies to provide the relevant equipment economic benefits gradually appeared, the revenue of about 126 million yuan, accounting for about 7% of the total revenue, year-on-year growth of about 138%.
Pharmaceutical equipment is divided into process equipment, preparation equipment and innovative equipment. The company previously focused on preparation equipment, and in recent years gradually developed process equipment and innovative equipment. In the past, the domestic biopharmaceutical process equipment is mainly imported, in recent years, the domestic innovative process equipment development is faster, such as complex injection (ADC drugs, etc.), cell and gene therapy equipment.
The company includes all advance receipts without recognized revenue in contract liabilities. During the reporting period, the company's contract liabilities amounted to about $2.78 billion, up 38% from the beginning of the year.
The company's bioengineering division had operating income of $400 million for the 2021 half-year. According to the classification of products: 25% of them are biological dispensing equipment, 30% are separation and purification of ultrafiltration and other equipment, and the remaining 45% are bioreactors, inactivation systems and so on. According to the regional classification: 60% of them for domestic sales, 40% for international export sales.
Currently, complex formulations account for about 20% of the company's injection revenue. Complex injectables mainly refer to liposomes and microspheres and other new technologies, and many of the company's products are directly involved in customers' product development.
Chutian Technology
In the first half of the year, the domestic production capacity of the new crown vaccine construction is relatively fast, the second half of the year there is a part of the construction, but the rate of growth has declined.
Demand is rising abroad, such as Sinopharm, Kexing Zhongwei in new capacity construction abroad, as well as the demand for capacity construction of foreign local pharmaceutical companies are increasing.
Chutian Si Youte registered in Ningxiang, is currently preparing to set up a wholly owned subsidiary in Shanghai Lingang, the early stage of the relevant product development, production and promotion will be placed in Chutian Si Youte's Shanghai subsidiary. The technical team of Chutian Siyute comes from the technical talents who have been working in the same kind of enterprises in foreign countries for many years, and the production science and technology (MTS) and quality control personnel of domestic biopharmaceutical head enterprises. Some of the products we plan to produce at the end of this year, and early next year, we will be able to mass-produce and promote them in the market after validation at the customer side.
Bioengineering and stand-alone products in the revenue split section of the half-yearly report specifically include products such as stock preparation, inactivation, ultrafiltration, chromatographic separation, etc., and do not include products used in vaccine production, such as water production, aseptic dispensing, and post-packaging.
Stainless steel bioreactor can do 5000L; disposable reactor within 50L already, more than 50L is expected to be launched early next year.
The company's new high-performance pre-filled injection robot detection system PIM40-DR, using four advanced international brand robots to work together, can realize the pre-filled syringes out of the slot - light inspection - back to the slot of the full-automatic, which can be used for vaccines, peptides, proteins and other high value-added drugs detection, is the company's product performance continues to be a major factor in the development and development of the company's products and services. It is the result of continuous improvement and upgrading of the company's product performance.
Excluding Romaco, the Department's export business revenue accounted for about 10% of total revenue. Planning for the export business to maintain an annual increment of 10%-20%, plans to around 2025, the company's export business revenue accounted for 40%-50% of total revenue. The company will realize this plan by upgrading the technology, quality and international services of its products. After the merger and acquisition of Romaco, the company can borrow Romaco's marketing and sales channels, in the current product quality has been close to the European level, the company will continue to increase the development of the international market, through the establishment of overseas sales and service centers, international sales and service to localization.
The company sells customized products, will be for customer demand program and customer one-on-one quotation, can be transferred out of the price of raw materials; bulk raw materials, such as 316 stainless steel, the company has predictive reserves; the company's bargaining power of the upper reaches of the supplier is strong, the procurement side can control the price. In summary, upstream raw material increase on the company's impact is not significant.
Six, reference Dongfulong, Chutian Technology 2021 half-yearly report
Dongfulong, Chutian Technology research summary bulletin
# Dongfulong # # Chutian Technology