2021-10-27 Xie Muqing of Zhongtai Securities Co., Ltd. conducted research on Jinyu Medicine and issued a research report "accelerated recovery of conventional business, COVID-19 test continuous volume". This report gives a buy rating to Jinyu Medicine, and the current stock price is 108.61 yuan.

Jinyu Medicine (603882)
Event: on October 25, 2021, the company released its three-quarter report of 2021, saying that in the first three quarters of 2021, the company achieved operating income of 8.617 billion yuan, an increase of 47.87% over the same period last year; net profit of 1.672 billion yuan, an increase of 58.52% over the same period last year; deducting 1.648 billion yuan of non-return net profit, an increase of 61.62% over the same period last year.
Q3 performance is in line with expectations and still achieves rapid growth at a high base. 2021Q3 continues to maintain the momentum of rapid growth, the recovery of regular business is good, and the regional COVID-19 outbreak continues to contribute new increments. 2021Q3 achieved an operating income of 3.162 billion yuan in the single quarter, an increase of 34.39% over the same period last year, a net profit of 613 million yuan, an increase of 22.84% over the same period last year, and a non-return net profit of 619 million yuan, an increase of 28.36% over the same period last year.
The industry leading scale effect is becoming more and more significant, and the optimization of income structure leads to the improvement of profit margin. With the continuous increase of the income scale of the company's medical diagnosis service, the dilution effect of fixed costs is further highlighted. 2021Q3 company sales expense rate 11.43%, year-on-year decline 0.46pp, management expense rate 11.20%, year-on-year drop 0.38pp, financial expense rate 0.09%, year-on-year decline in 0.18pp. On the other hand, the company adheres to the high-quality development strategy, the income share of high-end temporary inspection projects and high-quality customers continues to increase, and the project structure and customer structure continue to be optimized, leading to the improvement of overall profitability. The proportion of revenue of the company's tertiary hospitals (excluding COVID-19) reached 34.99%, which increased 4.49pp over the same period last year, and the per unit yield of customers increased by 43.76%. The gross profit margin of the company reached 46.63%, the net profit increased by 20.26%, and 1.39pp increased over the same period last year.
Routine business is speeding up again, and COVID-19 's normalized prevention and control continues to bring testing demand. (1) in terms of conventional testing business, 2021Q1-Q3, the company's regular business income reached 5.261 billion yuan, an increase of 33.34% over the same period last year and 34.21% over 2019 (a compound growth rate of about 16% over 19 years); 21Q3's conventional business income was about 1.915 billion yuan, an increase of about 14% over the same period last year (about 18% compared with the 19-year compound growth rate). From the perspective of business segmentation, the company's testing services achieved steady growth, including 31.4% year-on-year revenue from blood diseases, 38.5% year-on-year growth in solid tumor series, and 42.8% year-on-year growth in neuroimmune and autoimmune diseases. After the epidemic prevention and control has entered a normal stage, hospital diagnosis and treatment activities have gradually resumed, and we expect that with the continuous recovery of hospital visits, the company's routine inspection business is expected to continue to grow rapidly. (2) in terms of COVID-19 testing, 2021Q1-Q3 Company realized COVID-19 testing income of about 3.356 billion yuan. By the end of September 2021, the company had tested more than 170 million people, including about 71 million people in the third quarter. The company has established a "trinity" joint testing system of the central laboratory, the Falcon gas film laboratory and the Falcon mobile detection vehicle, which can meet the needs of regular preparation and emergency response testing. Nucleic acid testing tasks have been completed for Nanjing, Zhengzhou, Fujian and other places. At present, the epidemic situation of COVID-19 in China has not completely improved, and the local COVID-19 epidemic breaks out from time to time. Epidemic prevention and control may be further strengthened after entering autumn and winter. We expect that COVID-19 testing business will continue to contribute to the company's performance increment in the future.
Profit forecast and investment advice: we expect the company's income from 2021 to 2023 to be 112.93, 113.05 and 12.214 billion yuan (107.93, 103.53 and 11.993 billion yuan before adjustment), an increase of 36.98%, 0.11% and 8.05% over the same period last year. The net profit attributed to the parent company is 20.92,18.77 and 1.923 billion yuan (18.51,14.10 and 1.676 billion yuan before adjustment) Year-on-year growth of 38.56%,-10.26%, 2.44%, corresponding to EPS of 4.55,4.09,4.19. Considering that the company as an industry leader is expected to directly benefit from the rapid development of the industry, COVID-19 testing services are expected to continue to bring increments, laboratory profitability continues to improve, and maintain the "buy" rating.
Risk prompt events: laboratory profit time does not meet the expected risk, quality control risk, COVID-19 duration uncertain risk and so on.

A total of 19 agencies have rated the stock in the last 90 days, including 14 buy ratings and 5 overweight ratings; the average institutional target price in the past 90 days is 174.61; according to the Securities Star valuation analysis tool, the Golden Domain Medical (603882) good company has a rating of 4.5 stars, a good price rating of 2 stars and a comprehensive valuation rating of 3.5 stars.