Can Yarui Bio continue with decent progress in the post-epidemic era?
Author | Shengma Finance Yang Yifan
Edit | Ouyang Wen
As the domestic epidemic continues, companies related to the new coronavirus detection have made a lot of money, and some companies have started their listing plans.
Recently, Suzhou Yarui Biotechnology Co., Ltd. (hereinafter referred to as "Yarui Biotechnology"), a domestic molecular diagnostic equipment supplier, submitted a prospectus to GEM .
During the epidemic, PCR detection technology with high sensitivity, specificity and convenience has become the mainstream diagnostic technology during the COVID-19 pandemic and has been widely used, and Yarui Bio's performance has also been greatly improved.
However, after reviewing the company's prospectus, Shengma Finance found that after considering the epidemic, the company's products are relatively single, and its R&D strength is not outstanding, and there is not much room for imagination for future performance growth. And the use of funds raised by IPOs seems to be unable to convince the market.
High performance growth may be difficult to maintain
Public information shows that the company's main products are various models of " real-time fluorescence quantitative PCR instrument ". This instrument is mainly used in the detection of various diseases, including infectious disease detection, tumor screening, genetic screening, food safety testing, basic medical research and epidemic prevention and control fields.
In 2019, Yarui Bio's operating income was 80.4429 million yuan, while in 2020 the number soared by 446.64% to 440 million yuan. This is mainly due to the outbreak of the new crown epidemic in early 2020 and the demand for epidemic-related testing has increased significantly.
From 2021 to the first quarter of this year, the company's revenue growth rate slowed down, but it still reached 741 million yuan and 434 million yuan respectively; during the same period, the company's net profit was 202.247 million yuan, 190 million yuan, 279 million yuan and 211 million yuan respectively.
Specifically, Yarui Bio's revenue fluctuates every quarter due to the control of the new crown epidemic. For example, in the second quarter of 2021, due to the effective control of the domestic COVID-19 epidemic, the market demand for real-time fluorescence quantitative PCR instruments decreased, and the company's revenue also decreased. In Q2 2021, sales revenue only accounted for 5.84% of the total annual revenue, while revenue in 2019 and 2020 accounted for 41.93% and 20.49% respectively.
can be seen. Once the domestic epidemic is effectively controlled or the epidemic policy is relaxed, the company's performance will be greatly affected.
In addition, the current business structure of Yarui Biotechnology is very single. From 2019 to the first quarter of this year, the company's main product, real-time fluorescence quantitative PCR instrument, generated revenues in each period were 79 million yuan, 430 million yuan, 737 million yuan and 432 million yuan, respectively, accounting for 98.75%, 97.73%, 99.46% and 99.54% of the total revenue, respectively, accounting for a high proportion, all of which exceed 97%.
In addition to real-time fluorescence quantitative PCR instruments, the revenue generated by other main products in each period was RMB 784,700, RMB 4,289,300, RMB 1,397,200 and RMB 1,664,400, respectively, accounting for only 0.98%, 0.99%, 0.19% and 0.38% of the main business income. It can be seen that the company has no other products to support its performance.
On the evening of September 25, Shengma Finance asked Yarui Bio about the above-mentioned questions, whether there are any plans to expand into other businesses in the future? However, as of press time, the company has not responded.
R&D expenses are doubtful
For companies that are about to go public, although there are changes in current performance, if the company has solid technical strength, the market and investors will be willing to pay.
However, from the data, Yarui Bio's investment in R&D expenses in the past two years does not match its performance growth rate.
prospectus shows that from 2019 to the first quarter of 2022, the company's R&D investment expenses were RMB 10.8029 million, RMB 23.2836 million, RMB 44.7468 million and RMB 14.5851 million, respectively, accounting for 13.43%, 5.29%, 6.04% and 3.36% of the total revenue, respectively.
shows that although the company's expense investment is increasing year by year, its proportion has decreased, which is enough to prove that the company's attention to R&D is far from enough.
Regarding the decline in R&D expense ratio, the company explained in the hierarchy book that the R&D expense ratio was higher in 2019, mainly because the sales scale was small at that time and the company's R&D investment was more; from January to March 2022, the company's R&D expense ratio decreased, mainly because the company's revenue growth was greater than the R&D expense increase.
Shengma Finance also found that Yarui Bio's prospectus shows that the company's R&D expenses are mainly composed of labor costs, material costs, entrusted R&D expenses and depreciation and amortization expenses and service fees. However, data shows that in the first quarter of this year, the company's material fees, commissioned R&D expenses and proportions all decreased, while the service fees during the same period increased significantly, reaching 2.183 million yuan, accounting for 14.97%, and the amount even exceeded the whole year of 2020. The company did not explain this in the prospectus.
In addition, compared with similar companies such as Zhijiang Bio, Shuoshi Bio, and Rendu Bio , the R&D expense rate of Yarui Bio in each year during the reporting period was lower than its arithmetic average.
The rationality of the funds raised is questionable
It is understood that Yarui Bio's IPO plans to raise 750 million yuan, of which 680 million yuan will be used for the research and development and manufacturing projects of molecular diagnostic equipment. The prospectus shows that the planned construction period of the Yarui Biomolecular Diagnostic Equipment R&D and Manufacturing Project is 2.5 years. After the project is completed and put into production, it will add 6,720 new molecular diagnostic equipment production capacity per year. However, judging from the current real-time fluorescence quantitative PCR instrument of the company's main product, its capacity utilization rate has been saturated during the reporting period.
In addition, the project will not be completed in two years. Once the new crown epidemic is further controlled, the national epidemic prevention and control policy is adjusted, and the nucleic acid testing capacity of various regions can meet the needs, the company may face the risk of overcapacity.
In addition, Yarui Bio plans to use 70 million yuan to supplement working capital, but in fact, the company's cash flow situation is not very tight. In 2019, its net cash flow was RMB 22.0925 million. In 2020, the figure reached RMB 160 million. In 2021, its net cash flow was RMB 189 million. In the first quarter of this year, the figure reached RMB 254 million, far exceeding its net profit.
Before that, the company had made large dividends. According to the "Diployment Plan" on November 27, 2020, the company decided to distribute 68 million yuan to shareholders, and each shareholder would enjoy the dividend income according to the proportion of investment, which accounted for about 36% of the net profit of the year. At that time, the company's actual controllers Nie Jing, WU YUAN MIN (Wu Yuanmin), and NIE EILEEN XIAO FENG (Nie Xiaofeng), controlled a total of 77.79% of the company's equity, and the three of them could receive a total dividend of about 52.9 million yuan.
In summary, if the account funds are sufficient, shareholders spend a lot of money, and capacity utilization rate is sufficient, a question mark may be placed on whether the company's financing reasons are sufficient.
END
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