Under the new crown epidemic, many test reagent manufacturers riding on the wind of soaring performance, have to rush to the capital market.
Recently, last year's net profit soared 12 times in the Han Shengtai Biotechnology Co.
As an in vitro diagnostic manufacturer, Zhonghan Bio was founded in December 2010, and started as an agent to sell the products of well-known foreign in vitro diagnostic brands, and now owns a product line that includes diagnostic instruments, reagents and biological raw materials.
The prospectus shows that Zhonghan Bio mainly acts as an agent to sell reagents for testing infectious diseases.In 2019, the company's sales of agent products accounted for 75.05%, while its own products accounted for only 24.95% of its main business revenue.
In 2020, under the influence of the new crown epidemic, the general outpatient clinics of some hospitals were suspended and the number of medical institutions visited decreased, resulting in a decline in the demand for infectious disease detection reagents, and the performance of Zhonghan Biologicals declined.In 2019 and 2020, the company realized an operating income of 351 million yuan and 301 million yuan, and a net profit of 29.032323 million yuan, respectively, 2008.52 million yuan.
It is also at this time, Zhonghan Biological began to focus on the development of its own brand, and began to develop and mass production of reagents related to the new crown detection.2021, Zhonghan Biological own products revenue share has risen to 85.13%.
Benefiting from the growing global demand for new crown test reagents, Zhonghan Bio's 2021 earnings took off, soaring 12 times. According to the prospectus, Zhonghan Bio realized operating income of 1.157 billion yuan in 2021, with a net profit of 266 million yuan.
Zhonghan Biological said that in 2020 and 2021, the company's own new crown testing reagents to achieve revenue of 24.636 million yuan and 833 million yuan, accounting for the current operating income ratio of 8.19% and 72.00%; by the new crown testing reagents rapid increase in revenue, the company's 2021 revenue from its main business year-on-year jumped 297.39%.
But after the exclusion of the new crown products, Zhonghan biological revenue shrunk significantly, 2021 after the exclusion of revenue of only 324 million yuan.
Currently, Zhonghan Bio's new crown test reagents are mainly sold outside of China, with 71.82% of revenue from foreign sales in 2021. As of May 31, 2022, Zhonghan Biological's new crown antigen detection products are in the process of applying for medical device registration certificates in China and are not yet available for sale in the domestic market.
Zhonghan Bio also admitted that the current screening of Neocoronavirus in China is mainly based on nucleic acid testing, supplemented by other means. Antigen and antibody tests are not the mainstream testing methods in China, which makes the demand for neocollagenic antigen detection reagents in the domestic market uncertain.
In addition, the increased demand for the new crown test under the epidemic has attracted many in vitro diagnostic companies to enter the new crown test market, and competition has intensified, resulting in a downward trend in the sales price of the product. The gross profit margin of Zhonghan Bio's new crown testing reagents also decreased from 62.53% in 2020 to 50.21% in 2021.
Five funds lurking
Finance.com noted that Zhonghan Biological at this time seeking A-share listing in addition to riding the performance of the wind, there is also external pressure from the betting agreement.
Prospectus disclosure, in the Han biological by Hangzhou Lizhu, Boditech, in the Han technology and South Korean natural person EuiYulChoi by consensus *** with the establishment of the registered capital of 39.9 million yuan. 2016 August, the company implemented the share reform, increased to 19 shareholders, which introduced the long dike investment, Sai Silicon Silver Investment two private equity funds. By the end of 2016, the shareholding ratio of Long Beach Investment and Sai Silicon Silver Investment was 8.62% and 1% respectively.
In September 2019, Zhonghan Bio first increased its capital, signing the Capital Increase Agreement with Hongteng Investment, Houpu Ruiheng and Xu Xiaoxiao, with a capital increase price of RMB 13.13/share, and signing the Equity Transfer Agreement with Long Beach Investment. After the completion of this capital increase and equity transfer, the shareholding ratio of Long Beach Investment, Hongteng Investment, Houpu Ruiheng and Sai Silicon Silver Investment will be 10.42%, 2.83%, 2.83% and 0.9% respectively.
In June 2021, Zhonghan Biological once again increased its capital, the price of which was RMB20.925/share, and introduced a new shareholder, Jin Helu II, who subscribed to all the new shares. After the completion of the capital increase, the shareholding ratio of Changti Investment, Jinhe II, Hongteng Investment, Houpu Ruiheng, and SaiSiYin Investment were 9.96%, 4.44%, 2.7%, 2.7%, and 0.86%, respectively.
As of the signing date of the prospectus, Long Beach Investment, Jin Helu II, Hongteng Investment and Houpu Ruiheng were among the top 10 shareholders of Zhonghan Bio.
What's worth paying attention to is that in the process of successive financing, Zhonghan Bio and the above five private equity funds have signed betting agreements. In the four betting agreements, the betting terms all mentioned the latest listing time of the Chinese Han biological.
Since 2018, Zhonghan Bio has been under pressure to go public in recent years.
The betting agreement between Sai Silicon Silver Investment and Zhong Han Bio shows that if Zhong Han Bio is not listed as of Dec. 31, 2018 (except for reasons not caused by Zhong Han Bio), the investor has the right to ask the controlling shareholder, Hangzhou Lizhu, to buy all or part of its stake in Zhong Han Bio.
The listing time of Zhonghan Bio as agreed in the betting terms of Hongteng Investment, Houpu Ruiheng and Changdi Investment is to complete the IPO filing by June 30, 2022, and to complete the IPO by Dec. 31, 2023; the latest listing filing time set by Jin Helu II is to be completed by June 30, 2024, and the completion of the IPO is to be completed by Dec. 31, 2025.
Figure source: Zhonghan Biologicals prospectus
Zhonghan Biologicals said in the prospectus that if the company fails to complete the listing, the above betting agreement will be automatically reinstated, and the repurchase obligations of the company's controlling shareholder, Hangzhou Liju, and de facto controller, Zhou Xuyi, will be triggered, and there is a risk of possible changes to the proportion of shareholding of existing shareholders.
New crown testing market peaked?
In fact, in vitro diagnostic (IVD) companies benefiting from the dividends of the new crown test are not only Zhonghan Bio, but also a number of IVD companies listed on the market.
Recently, a number of in vitro diagnostics (IVD) listed companies released the first half of the earnings forecast announcement.
In which, the new crown test leader JiuAn medical expects, in the first half of 2022 net profit of 15.1 billion yuan -15.5 billion yuan, an increase of 27466.36% -28196.60%, mainly due to the development of the U.S. outbreak of the impact of the local demand for the new crown antigen detection kits products increased dramatically.
Vantage Bio expects to realize net profit of 2.5 billion yuan to 2.75 billion yuan in the first half of 2022, up 246% to 281% year-on-year. Due to the impact of the domestic and international new crown pneumonia epidemic in the first half of the year, the company's new crown raw materials and new crown test reagents to achieve rapid growth in revenue and profit.
Daan Gene released the 2022 half-year performance forecast shows that the realization of net profit of 3.3 billion yuan - 3.7 billion yuan, an increase of 106.52% to 131.56%, mainly due to the market for new crown nucleic acid detection kits and nucleic acid detection instruments, related consumables continued demand, the company's performance has a positive impact.
However, Caijing.com noted that since the second quarter, the export volume of the new crown test reagents plummeted, the dividend period will end.
According to data from the State General Administration of Customs, the export value of China's new crown testing reagents has been declining sharply since reaching a peak of 18.024 billion yuan in February this year.
The value of exports was 3.91 billion yuan in April, down 73.2% from the 14.59 billion yuan in March 2022.
The value of exports was 1.81 billion yuan in May, down 53.7% from the previous year.
The value of exports was 1.87 billion yuan in June, down 53.7% from the previous year. 1.87 billion yuan in May, the value of exports in June was 1.81 billion yuan, basically flat year-on-year. 2022 January-June, China's cumulative export value of test reagents was 56.69 billion yuan.
According to the analysis of the Prospective Industry Research Institute, in terms of the competitive pattern of the domestic in vitro diagnostics market, the five overseas giants that occupied more than 5% of the market share in 2017 formed the first echelon of the in vitro diagnostics industry, *** occupying a market share of 36.8% of the domestic market; secondly, domestic high-quality in vitro diagnostics companies such as Myriad Healthcare, Kewa Bio, Daan Genetics, and New Industries formed the The second echelon; finally, a large number of domestic small and medium-sized enterprises form the third echelon, 600 companies *** occupy about 40% of the market, the market share is low, the concentration of the domestic IVD market is low.
Tianfeng Securities research report that the in vitro diagnostic industry as a highly technology-intensive industry, product technology content is high, large investment in research and development, high demand for complex scientific research personnel, with technical barriers and talent barriers, the entry threshold for new entrants. With the upgrading of existing technologies, technologically backward enterprises may be gradually eliminated, and market concentration is expected to increase.
In terms of research and development, from 2019 to 2021, Zhonghan Bio's research and development expenses for each year continue to increase, respectively, 24,761,600 yuan, 30,843,100 yuan and 55,613,800 yuan. As of May 31, 2022, Zhonghan Bio's own products have obtained 51 Class II medical device registration certificates in the territory. However, excluding the impact of the new crown testing reagent products, the company's agency products still account for half of the total.
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