from Ningbo, Zhejiang, new stock Xinzhi Bio will be listed on October 10. The company issued at a price-to-earnings ratio of 30.12 times, with a allocation rate of 4.97%. This allocated ratio is second only to 6.79% of Zhongke Meiling, setting the second highest allocation rate for new stocks since the opening of the Beijing Stock Exchange.
Many investors are worried that with such a high allocation ratio, will the issue price be broken on the listing? I think that even though Xinzhi Bio is supported by the halo of "the first scientific instrument stock of the Beijing Stock Exchange", although the recent emergence of new stocks such as Kunming Technology, silane technology, Huifeng Diamond, etc., it is still likely to break the issue price.
We have observed that several new shares issued by the Beijing Stock Exchange recently belong to the lightning review, which investors jokingly call "recommended to give birth". Tianma New Materials, Zhongke Meiling, Xinzhi Biotech and Hualing Co., Ltd. are all recommended students, with funds gathered and investors are attracting attention. However, the valuations of these recommended issuances are also not vague, and the issuance price-to-earnings ratio of Hualing Co., Ltd. is as high as 54.36 times.
"Recommended to be given to students" or high-quality companies, this is not an excuse for high-priced issuance. When investors choose a company, they should choose according to the three good conditions of "good industries, good companies, and good prices". This is true for long-term investment and new stock subscriptions.
The following is the subscription strategy before the issuance of Xinzhi Bio. It is for reference only and is not used as an investment basis.
Xinzhi Bio has several highlights: First, it was the lightning review, and it only took 57 days from the application materials to the review. Second, the issuance base price was reduced from 22 yuan to 15 yuan. The third is to introduce 9 strategic investors, including Jin Changchuan Capital, Danguishun Asset Management, Qingdao Wentai, Kaiyuan Securities , etc., to subscribe to 4.438 million shares. Fourth, Zhejiang enterprises have steady growth. Fifth, in 2021, the company was selected into the third batch of "specialized, specialized, and new small giants" enterprises of the Ministry of Industry and Information Technology.
1. A well-known domestic life science instrument manufacturer
Xinzhi Biology is a high-tech enterprise specializing in providing scientific experimental instruments and equipment for users in the field of life science research and industrialization. The company's core focuses on three categories of products: biological sample processing, molecular biology, and drug research, laboratory automation and general equipment. The products are widely used and can be expanded to many fields such as biomedical , medical and health care, IVD, biosafety , food safety, disease prevention and control, inspection and quarantine, environmental protection and new materials research. The company has become a well-known domestic life science instrument manufacturer.
Ultrasonic crusher reaches the leading domestic and international advanced level . The SCIENTZ-950E ultrasonic cell crusher passed the appraisal and acceptance of "New Technology and New Products" in 2021. The identification conclusion is: the product's technical level and processing capabilities are at the leading domestic and international advanced level. According to the report of " China Science Daily ", the company developed the high-pressure gas gene gun "breaks the foreign technology monopoly in one fell swoop and fills the gaps in related fields in China" , and won the second prize of Zhejiang Province Science and Technology Progress Award. In 2019, the "Efficient Extraction and Separation of Plant-source Bioactive Materials, Technology Equipment and Industrialization Project" participated in the research and development won the first prize of Zhejiang Province's Science and Technology Progress.
After network data query, there are currently only three companies in the world (only one issuer in China) that can develop and produce similar products. Through the comparison of public data, the high-pressure gas gene gun developed by the company is comparable to the level of foreign competitors in terms of core parameters and performance such as control pressure range, bombardment area, and medium particle size. It has independent intellectual property rights in China and has obtained 1 invention patent.
Overview. The company has three major products including biological sample processing instruments, molecular biology and drug research series products, laboratory automation and general equipment, etc. It is widely used in Chinese Academy of Sciences , Chinese Academy of Agricultural Sciences , Chinese Academy of Medical Sciences, CDC, Research Institute of the Ministry of Health, Drug Testing Institute , Tsinghua University , Peking University, Zhejiang University , Fudan University and other well-known universities and research institutions, and WuXi AppTec , Hequan Pharmaceutical, Kingsrui, Kelly Ying , Kanglong Huacheng, BGI and other well-known enterprises. It has outstanding industry status and high professional reputation.The company's ultrasonic crusher, high-pressure gas gene gun and other products are at the industry-leading level.
Bio sample processing instruments are the company's main source of revenue, accounting for 64.03%, 63.01% and 62.04% of the main business revenue, respectively. Laboratory automation and general equipment accounted for 25.06%, 23.38% and 22.36% of the main business revenue in each year. The molecular biology and drug research series products accounted for 3.90%, 6.20% and 8.62% of the main business revenue in each year.
The gross profit margin difference between the comparable listed companies in the same industry is large, mainly because there are no listed companies in the life science instrument industry that are completely comparable to those of the issuer in the domestic market. Comparable companies have great differences from issuers in terms of product structure, downstream customers, etc., so there is a large difference in gross profit margins. Among them, Tailin Bio's main business areas are microbial detection and organic substance analysis. Leibertech products focus on experimental analysis instruments in the field of analytical chemistry. Sande Technology's main business areas are fuel intelligent experimental analysis instruments. Hexin Instruments' main business areas are mass spectrometer related products in the field of environmental protection.
The company mainly sells domestically. The overseas sales amounts in each year were RMB 3.8114 million, RMB 4.9893 million and RMB 4.6056 million, respectively, accounting for 3.19%, 3.51% and 2.76% of the main business income, respectively. The company's total sales to the top five customers accounted for 12.75%, 14.43% and 16.01% of the current period, respectively. There is no situation where the sales ratio to a single customer exceeds 50% of the total, and there is no situation where the number of customers is heavily dependent on a few customers.
Company attaches importance to R&D. The company's R&D investment was RMB 10.4642 million, RMB 12.616 million and RMB 12.5204 million, respectively, accounting for 8.67%, 8.80% and 7.45% of the operating income of each period, respectively. The company has authorized 62 patented technologies, including 15 invention patents, 41 utility model patents, and appearance design patents, 6. At present, the company has 30 offices across the country, with sales engineers and after-sales engineers .
company is a typical family business. Zhou Fang, Xiao Changjin, Zhu Jiajun and Xiao Yi are joint actors, Zhu Jiajun and Xiao Yi are husband and wife, and Xiao Yi is the daughter of Zhou Fang and Xiao Changjin. The equity structure of the four people has not changed significantly since the company's listing. The four people control a total of more than 60% of the company's shares.
Dynamic Laboratory of universities and research institutions downstream of is the basic application field of life science instruments and an important force in promoting independent research and development of scientific instruments and equipment. According to statistics from the Ministry of Education of the People's Republic of China, the total value of scientific research instruments and equipment in domestic universities continues to increase, from 405.86 billion yuan in 2015 to 605.908 billion yuan in 2019, which will provide life science instrument enterprises with broad development space.
China Pharmaceutical market R&D expenditure is growing faster than the global market. According to Frost & Sullivan, the R&D expenditure of the Chinese pharmaceutical market increased from US$10.5 billion in 2015 to US$21.1 billion in 2019, with a CAGR of approximately 19.1%, and is expected to grow to US$47.6 billion by 2024, with a CAGR of 17.7% from 2019 to 2024. The size of China's CRO market grew from US$2.6 billion in 2015 to US$6.9 billion in 2019, with a CAGR of approximately 27.3%, and is expected to reach US$22.2 billion by 2024 and a CAGR of approximately 26.5%. With the rapid growth of downstream industries such as biopharmaceuticals and CRO and the continuous increase in R&D investment, the demand for life science instruments and other related products has also been quickly released.
2. The company's performance growth was stable, with a growth of 30% last year
Benefiting from the rapid development of the domestic life science instrument industry, Xinzhi Bio's revenue increased from 121 million yuan to 168 million yuan from 2019 to 2021, and the corresponding net profit attributable to shareholders increased from 34.0401 million yuan to 48.4125 million yuan. In 2021, the company achieved operating income of 168 million yuan, a year-on-year increase of 17.35%, and net profit of 48.41 million yuan, a year-on-year increase of 31.65%, and profit after deducting non-operating items of 44.21 million yuan, a year-on-year increase of 34.64%.
The main business revenue growth rate of the company is mainly biological sample processing instruments, with revenue growth accounting for 57.62% and 56.45% of the total growth in each year, respectively. Among them, freeze-drying and ultrasonic crushing and extraction contribute significantly, mainly due to their excellent quality and stability, they have a certain popularity and share in the market; molecular biology and drug research instruments gradually grow in the proportion of revenue growth, becoming the driving force for the continuous growth of future revenue.
However, Xinzhi Bio's performance in the first half of this year was average, and its non-net profit increased in single-digit growth. The company's operating income from January to June 2022 was 86.0879 million yuan, an increase of 23.03% year-on-year, and the net profit attributable to the parent company shareholders was 17.747 million yuan, an increase of 14.20% year-on-year. After deducting non-recurring gains and losses , the net profit attributable to the parent company owner was 16.0753 million yuan, an increase of 4.31% year-on-year.
quarterly, in the first quarter of this year, the company achieved operating income of 34.3232 million yuan, a year-on-year increase of 21.04%, and a net profit of 7.0245 million yuan, a year-on-year increase of 21.58%.
In the first half of this year, the company's revenue from molecular biology and drug research instruments increased by 179.41%, but the gross profit margin of the business decreased by 37.27%, which is the increase in revenue from sales of nucleic acid extractors in this period. In the first half of 2022, the company received an order for nucleic acid extractors. Considering the insufficient production capacity and the urgent supply time required by customers, it used a third-party enterprise to conduct production.
3. Forecast annual performance from contract liabilities and inventory
So, what will the company's performance in the second half of this year? We can get a glimpse of the clues from contract liabilities and inventory. From a financial perspective, contract liabilities can reflect the company's order status to a certain extent, and the in the inventory in the product and the goods sent out can reflect the delivery order status to a certain extent.
, contract liabilities
At the end of June this year, the company stated in its semi-annual report that the company's contract liabilities were 9.526 million. At the end of 2021, the company's contract liabilities were 6.1 million yuan. At the end of 2020, it will be 5.25 million.
It can be seen that the number of companies in hand represented by the company's contract liabilities has increased year by year, and the company's in hand orders at the end of June is nearly 10 million.
, inventory
At the end of June this year, the company had 7.05 million products, and 3.52 million by the end of 2021. At the end of June this year, 2.11 million goods were issued, and 1.32 million by the end of 2021.
, seasonal
The company's main business income has certain seasonal fluctuations. Due to the impact of the Spring Festival, the first quarter will usually be significantly lower than the other three quarters; affected by the progress of fiscal budget allocation, demand in the fourth quarter will often be slightly higher than the average of the other three quarters. Generally speaking, demand in the second half of the year will be slightly higher than the first half of the year. The operating income of comparable companies fluctuates seasonally, and the proportion of operating income in the fourth quarter is relatively high.
, capacity utilization rate
The company's capacity utilization rate is now very high, exceeding 100%.
. Comprehensive analysis
As a Zhejiang enterprise, the company has the good character of Zhejiang businessmen's steady and pragmatic, and the company's performance in previous years has basically grown steadily. The company had 9.526 million orders at the end of June, more than in previous years. There are also many products and goods shipped at the end of last year. After the company built and put into production, its capacity utilization rate still exceeded 100%, and its response was good. The company's performance in the second half of the year was better than in the first half of the year, accounting for 60%. The company's performance in the first half of the year was average, mainly because it was not very good in the second quarter. It may be affected by the epidemic, but it was OK in the first quarter. Therefore, the company's annual performance is expected to grow steadily this year, and generally there will be no major rise or fall. It is expected that it will be around 20% if it is normal.
4. Capacity expansion and under-construction projects
. Under-construction projects: The newly built factory completed the completion acceptance in 2021
At the end of each period of the reporting period, the book value of the company's fixed assets was 24.8749 million yuan, 22.0825 million yuan and 38.8467 million yuan respectively. The company's fixed assets mainly consist of houses and buildings, machinery and equipment, transportation equipment, etc. The reason why the book value of fixed assets grew faster in 2021 compared with 2020 was mainly because the newly built factory buildings were converted from under-construction projects to fixed assets in 2021, and the under-construction projects were transferred to RMB 17.3898 million.
At the end of each period of the reporting period, the book value of the company's under construction projects was RMB 31,100, RMB 11.4338 million and RMB 310,700, respectively. The company's under construction projects are mainly new factories, and the completion acceptance will be completed in 2021.
At the end of June this year, there were 676,000 projects under construction, which is the decoration of a new factory.
Xinzhi Bio's 2020 year-end ceremony included the "Xinzhi Bio's Capacity Improvement and Expansion Project Construction Project Planning License" as part of the honors won by Company in 2019.
According to the public account of Ningbo Equity and Venture Capital Industry Association in July 2020, passing by the door of Ningbo Xinzhi Biotechnology Co., Ltd., there were endless sounds of machines. It turned out that this company with a construction area of 16,000 square meters and in its "thirty years old" is still expanding. "Today's factory buildings are far from meeting our production capacity needs, and we need to continue to expand," said Zhou Fang, chairman of Xinzhi Bio.
This 2020 interview also reported: "In 1991, Ningbo Xinzhi Keke Institute moved to a 180-square-meter factory and embarked on the path of manufacturing. It mainly engaged in electric glass homogenizer and ultrasonic cell crusher . In 1993, Xinzhi owned its own factory in , Haishu District, , with a construction area of 1,800 square meters. In 2008, Xinzhi Bio moved to Ningbo National High-tech Zone, with a construction area of 16,000 square meters. Today, Zhou Fang is still expanding the scale of Xinzhi Bio."
On August 13, 2021, Zhou Fang, chairman of Xinzhi, said at the opening ceremony, "Xinzhi has entered a new period of development and is facing a new transformation, so it is urgently needed for elite talents and elite teams." Zhou Dong believes that employees who can create value for the company after training are the most important talents of the company. She said that this training selected the best cadre elites in Xinzhi and took time to focus on training. First, to cooperate with Xinzhi's development in the past two years, and second, enters the new factory with the new lean production concept, , which is also an important talent investment in Xinzhi's future. The company has high hopes for the students present and hopes that everyone can gain a lot.
Comprehensive analysis: The company's under construction project is a new factory with a budget of 16.5 million. It has been built now. According to media reports, it has been put into use in the second half of 2021. Judging from the 2020 semi-annual report, 670,000 yuan was used to decorate the new factory, which shows that the new factory has not yet reached full production. The company's capacity utilization rate has exceeded 100% by the end of 2021, and the commissioning of new factories can increase performance. This also shows from one aspect that the company's performance in the second half of the year can still be expected.
, fundraising and investment project
Life science instrument industrialization construction project: The company plans to build a new production workshop through the construction of this project, optimize the existing production layout, and purchase related advanced production and testing equipment. The total investment is 240 million yuan, with a construction period of 3 years.
Comprehensive analysis: fundraising project construction is still early, and it is in the draw cake stage, and there is no short-term expectation. The company just completed the new factory building in the second half of 2021. In recent years, it has relied on , including this new factory, to grow . There is no expectation of large capacity expansion within three years. Therefore, the company's performance is expected to be stable in recent years.
5. Comparable company
At present, there are no listed companies in the life science instrument manufacturing industry that are completely comparable to those in the company in the domestic market.Some listed companies have certain similarities with issuers in terms of product functions, downstream customers, etc., and have certain comparability with issuers in terms of operating data, but the products they produce do not have a direct competitive relationship with the company. Therefore, four companies, Tailin Bio, Leibotech, Sande Technology and Hexin Instruments, were selected as comparable listed companies in the same industry.
Tailin Biology (300813.SZ): The company is a microbial detection and environmental control instrument researcher researcher, committed to becoming an internationally leading field of life sciences. The company's business focuses on technological innovation and product development in the fields of biotechnology, precision medicine, pharmaceutical engineering, , food safety, new materials, etc.
has a total market value of 2.6 billion yuan, and a static price-to-earnings ratio of 44 times after deducting non-recurring items. Listed on the GEM, the profit excluding non-recurring items was 59 million last year, an increase of 42%, and revenue was 283 million. The profits of non-recurring items in the first half of this year were 27.28 million, a slight increase of 2.79%. This size is basically the same as Xinzhi Bio, and is slightly larger than the latter. Xinzhi Bio's non-recurring profit was 44.2 million yuan last year and revenue was 168 million yuan.
Lebertech (688056.SH): Company is a technology company specializing in the research, development, production and sales of experimental analysis instruments. It is one of the main experimental analysis instrument suppliers that can combine various types and multifunctional sample preprocessing technology with fully automatic experimental analysis detection platforms into fully automatic experimental analysis instrument systems worldwide.
has a total market value of 2.4 billion yuan, and a static price-to-earnings ratio of 38 times after deducting non-recurring items. Performance in previous years has grown steadily, down nearly 40% in the first half of this year.
Sande Technology (300515.SZ): The company has always focused on the research, development, production and sales of experimental analysis instruments and their solutions, and has taken the lead in accumulating outstanding competitive advantages in the field of experimental analysis instruments for coal detection, and has continuously expanded the downstream fields through the professional upgrading and diversified application of core technologies.
has a total market value of 2.1 billion, and a static price-to-earnings ratio of 28 times after deducting non-recurring items. Last year's performance grew by 60%, and fell by 10% in the first half of this year.
Hexin Instruments (688622.SH): company focuses on the independent research and development, domestic production and industrialization of mass spectrometers, masters the core technology of mass spectrometers and has advanced process assembly capabilities. It is one of the few companies engaged in independent research and development in the field of mass spectrometers in China.
has a total market value of 2.1 billion, and a static price-to-earnings ratio of 47 times after deducting non-recurring items. Last year's performance increased by 60%, and the net profit after deducting non-operating items in the first half of this year was more than 30 million yuan.
In the issuance announcement, the average static price-to-earnings ratio of the above-mentioned comparable companies in the same industry in 2021 is 42.96 times. The company's industry belongs to "C40 Instrument Manufacturing Industry", and the industry's average static price-to-earnings ratio in the past month was 34.38 times.
Comprehensive analysis: comparable companies are very average in Science and Technology Innovation Board and GEM . The total market value is more than 2 billion yuan, and the valuation is about 40 times if it deducts non-recurring valuations. This may be related to the characteristics of this industry: First, non-standard production, with many types of products, and cannot be mass-based and large-scale assembly line production like the manufacturing industry. Second, the user has a long service life and can only buy it many years after buying it. These companies need to continuously explore the market and find new users. However, Xinzhi Bio's major customers are relatively stable, such as WuXi AppTec.
6. Valuation
Xinzhi Bio's initial offering of shares is 22.19 million shares. If over-allotment option is fully exercised, the number of shares issued this time is 25.5185 million shares. Before the exercise of the over-allotment option, the total share capital after issuance is 88.78 million shares; if the over-allotment option is fully exercised, the total share capital after issuance is 92.1085 million shares.
issuance price of 15 yuan, corresponding to a total market value of 1.3317 billion after issuance, and issuance market value of .5874 billion. The company's non-net profit was 44.2076 million yuan last year, corresponding to a price-to-earnings ratio of 30.12 times.
Is it expensive to issue a company's 30 times valuation? We can look at it from two perspectives. First, compare with comparable companies in Shanghai and Shenzhen. The valuation of comparable companies in Shanghai and Shenzhen is 40 times, and the maximum is 30 times on the Beijing Stock Exchange, which may be 25 times. The second is to compare with the same type of companies as the Beijing Stock Exchange.The Beijing Stock Exchange currently has no scientific instrument companies, and the most similar ones are Tonghui Electronics, CapitaLand Quartz, Audiway, Star Technology, etc. These valuations are really not low, with a dynamic price-to-earnings ratio of about 30 times. Tonghui Electronics is the most comparable product for electronic measurement instruments. Last year, the net profit after deducting non-operating items increased by 37%, and the increase of 9% in the first half of this year. Last year, the static price-to-earnings ratio was 36 times and the rolling price-to-earnings ratio was 30 times. This is a relatively high valuation in the Beijing Stock Exchange.
Therefore, Xinzhi Bio issuanced at a static price-to-earnings ratio of 30 times, with a relatively full valuation, and even a little overvalued. The subscription strategy is that it is best not to apply with large funds, you can try it with a small amount of funds, or simply not to apply. The investment strategy is to slowly intervene when the company breaks the issue price and holds it for a long time when the valuation is around 25 times. After all, this company is still relatively stable and is waiting for the company's performance to grow steadily.
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