SSSW(688399) Orient Securities·2024-10-23 10:03Investment Rating - The report initiates coverage on the company with an "Overweight" rating and a target price of 86.57 yuan [1] Core Views - The company is a leading player in nucleic acid molecular diagnostics, with a strong focus on women's health and infectious disease testing [2] - The company has a robust R&D capability, with over 600 products and a significant presence in the molecular diagnostics market [2] - The company has successfully diversified its product portfolio, including POCT and overseas market expansion, which has helped it achieve a turnaround in profitability [2] - The company's core technology platforms, including multiplex fluorescent quantitative PCR, NGS, and POCT, provide a competitive edge in the IVD market [2] Financial Performance - The company reported revenue of 1.8 billion yuan in H1 2024, a year-on-year decrease of 4.9%, but its regular business grew by 2.0% after excluding the impact of COVID-19-related business [2] - Net profit attributable to the parent company was 292.4 million yuan in H1 2024, a year-on-year increase of 143%, marking a turnaround from losses [2] - The gross margin in H1 2024 reached 68.1%, and the net profit margin improved to 16.5% due to better cost control [2] Industry Outlook - The domestic IVD market is expected to grow from 716 billion yuan in 2019 to 1,332 billion yuan in 2024, with a CAGR of 13.2% [2] - The molecular diagnostics market is projected to reach 25.8 billion yuan in 2024, driven by the rapid development of PCR and NGS technologies [2] - The company is well-positioned in the molecular diagnostics segment, with a strong presence in PCR-based testing and a leading market share in vaginal microecology evaluation systems [2] Product Portfolio - The company's product portfolio includes nucleic acid molecular diagnostic reagents, nucleic acid purification reagents, and immunodiagnostic reagents, with diagnostic reagents accounting for 90.2% of revenue in H1 2024 [2] - The company has developed a comprehensive range of products for infectious disease testing, including respiratory, intestinal, and bloodborne pathogens [12] - In the women's health segment, the company offers HPV testing, vaginal microecology evaluation, and reproductive health products, with its HPV testing business growing rapidly since 2016 [54] Overseas Expansion - The company has established branches in Hong Kong, the UK, and the US, and its overseas revenue in H1 2024 reached 52.8 million yuan, a year-on-year increase of 34.4% [19] - The company has successfully launched products for emerging infectious diseases such as monkeypox and dengue fever, with several products receiving international certifications [64] Technological Advancements - The company has developed a multiplex fluorescent quantitative PCR platform, which allows for high-throughput and cost-effective detection of multiple targets [33] - The company's SIC-1000 fully automated dry immunoassay analyzer, launched in H1 2024, offers rapid and accurate detection of respiratory pathogens, with results available in 16 minutes [45] - The company's HPV 21 genotyping and quantitative detection system uses a unique mathematical model to quantify viral load, providing more accurate screening for cervical cancer [39]