Nanmo Bio's growth is not as fast as its peers, and it has been overtaken by latecomers; due to the low ceiling of the industry, the company's growth potential is limited.
On December 28, 2021, Nammo Bio (688265. SH) officially landed on the Science and Technology Innovation Board, with an issue price of 84.62 yuan per share. On the day of listing, the company's stock price plummeted by 18.02%, and finally closed at 69.37 yuan / share, becoming another biomedical new stock that broke on the first day. On February 7, 2022, the closing price of Nanmo Bio was 60 yuan per share, and the stock price shrank by nearly 30% after only one month of trading.
During the reporting period (2018-2020 and the first half of 2021), NAMMO showed good growth, but in fact, a higher proportion of the company's profit came from non-current accounts. The company's non-net profit in 2018 and 2019 is not even lower than the level during the listing period of the New Third Board, and the high growth of non-net profit is only caused by the low base in 2018. If the year with the highest non-net profit before the reporting period is calculated as the base period, the compound annual growth rate of the company's net profit in 2020 is only 11.58%.
Moreover, Nanmo Bio faces a low industry ceiling, and its growth potential is relatively limited.
High growth "doesn't live up to its name"
Nanmo Bio is mainly engaged in genetically modified animal models and related technical services, originally listed on the New Third Board, and listed on the Science and Technology Innovation Board after delisting. From 2018 to 2020, the company achieved revenue of 121 million yuan, 155 million yuan and 196 million yuan, net profit of 15.11 million yuan, 23.25 million yuan and 44.56 million yuan, and the compound annual growth rate of revenue and net profit was 27.1% and 71.71%, respectively, reflecting good growth. However, the company's main business profits are far less glamorous than they seem.
From 2018 to 2020, the non-recurring profit and loss of Nammo Bio was 11.82 million yuan, 10.85 million yuan and 11.83 million yuan, accounting for 73.95%, 47.63% and 24.19% of the operating profit of the current period, and the profit contributed a large contribution. Correspondingly, the company's non-net profit for each period was 3.29 million yuan, 12.4 million yuan and 32.73 million yuan, respectively, with a compound annual growth rate of 215.41%. However, the company's high growth is due to the low base in 2018, in fact, the company has already achieved a non-net profit of around 10 million yuan, 9.41 million yuan, 9.6 million yuan and 12.83 million yuan in 2014-2016, while the operating income in the same period was 32.7 million yuan, 45.4 million yuan and 60.52 million yuan, respectively.
Compared with 2016, the company's revenue in 2018 doubled, but the deduction of non-net profit fell by 74.36%; in 2019, the revenue increased by 155.8%, and the deduction of non-net profit decreased by 3.34%. In 2020, the company's revenue and deduction of non-net profit increased by 224.19% and 155.02% respectively compared with 2016, and the profit side growth was acceptable, but the compound annual growth rate of deduction of non-net profit was only 11.58%, which is difficult to call "high growth".
From 2018 to 2020, the company's gross profit margin was 44.32%, 50.55% and 60.34%, respectively, and the gross profit margin increased year by year. However, after lengthening the time period, it can be found that the high increase in the company's gross profit margin is only gradually returning to historical levels. From 2014 to 2017, the gross profit margin of the company was 67.42%, 63.06%, 64.86% and 46.7% respectively.
Not only that, the performance growth of Nammo Bio is significantly inferior to that of its peers. Among the comparable companies in the same industry, the business model of Jicui Pharmaceutical Kang is the closest to that of the company, and it is currently sprinting to the science and technology innovation board. According to the prospectus registration draft, Jicui Yaokang was established in December 2017, and achieved revenue of 53.29 million yuan and net profit of -6.02 million yuan in 2018; in 2019 and 2020, the revenue of Jicui Yaokang was 193 million yuan and 262 million yuan, an increase of 261.64% and 35.91% year-on-year, and the net profit was 34.74 million yuan and 76.43 million yuan, respectively, an increase of 676.89% and 119.99% year-on-year. The non-net profit of Jicui Pharmaceutical Kang also grew well, with each period being 10.4 million yuan, 33.73 million yuan and 66.46 million yuan respectively, and the year-on-year increases of 224.38% and 97.06% in 2019 and 2020 were respectively.
In terms of segmentation, the revenue scale of the standardized model field of Jicui Yaokang is 95.27 million yuan, and more than 16,000 standardized models with independent intellectual property rights have been formed cumulatively, which is much higher than the operating income of 39.45 million yuan and more than 6,000 standardized models of Nanmo Bio-standardization Model; in addition, the revenue of Jicui Yaokang's functional pharmacodynamic business increased from 2.68 million yuan in 2018 to 32.01 million yuan in 2020, and the revenue of Nanmo's bioavailability evaluation and phenotypic analysis increased from 5.89 million yuan to 18.08 million yuan. It can be seen that the company's revenue scale and growth in these two businesses are not as good as those of Jicui Pharmaceutical. In 2020, the revenue of Jicui Yaokang's customized breeding business was 50.06 million yuan, although it was less than the 56.82 million yuan of Nanmo Bio, but from the perspective of growth rate, Jicui Yaokang was obviously higher. At present, the revenue scale of nanmo bio's customized model is higher than that of Jicui Yaokang, but it has decreased vertically, from 44.94 million yuan in 2018 to 42.48 million yuan in 2020.
Founded in September 2000, Nanmo Biotech was 17 years earlier than Jicui Yaokang, but the company's revenue scale has been quickly overtaken by latecomers. Moreover, Nanmo Bio also faces a low industry ceiling.
Industry ceiling "low"
NMMO is engaged in the research and development, production, sales and technical service business of genetically modified animal models, and its products are widely used in life science and medical research, drug research and development, CRO services and other fields. The genetically modified animal model produced by SMOX mainly refers to the genetically modified mouse model.
According to GMI data, the global animal model market size in 2019 was about $14.9 billion, and the genetically modified animal model industry to which the company belongs belongs to the animal model service industry, and the market size in 2019 was about $10 billion, accounting for about 67%. According to the animal categories used, the global market size of mouse models in 2019 is about 7.6 billion US dollars, and the market size of animal models with rats and monkeys as vectors is about 1.2 billion US dollars. Nammobio said that the products and technical services provided by the company are mainly based on mice and rats as carriers, and the market capacity is vast.
However, at present, the United States is the world's largest market for animal models and mouse models, with a market size of about $8.1 billion and $6.1 billion in 2019, respectively, of which the global market share of mouse models is as high as about 80%. The Nanmo Biology has always been mainly domestic sales, the proportion of sales in the reporting period is more than 90%, the proportion of export revenue is relatively small, in 2020, the main income of export sales is only 10.76 million yuan, and it is not easy for the company to vigorously expand the overseas market.
As far as the domestic market is concerned, the domestic market segment of Nanmo Bio's main business is small, and the scale of the industry market is probably limited. In 2019, the domestic animal model market size is about 1.1 billion US dollars, covering all animal model markets such as large mice, non-human primates, dogs, zebrafish, etc., of which the genetically modified animal model market is about 800 million US dollars. By animal type, the market size of large mouse animal models in the Chinese market totaled about $400 million in 2019.
In terms of segmentation, in 2019, the market size of the domestic customized model field was 430 million yuan, the market size of the standardized model field was 1.6 billion yuan, and the market size of the model breeding and feeding service field was about 600 million yuan, and the market size was small. Therefore, although the company's market share in the above segments is high, its sales amount is only a few tens of millions of yuan. In 2019, the company's market share in the field of customized models, standardized models, model breeding and breeding services in China was 9.2%, 2.5% and 10.1% respectively, and the sales revenue was 40.06 million yuan, 39.45 million yuan and 61.03 million yuan, respectively.
Founded in 1929, Jackson Laboratory is the world's largest supplier of genetically modified large mouse strains, with revenues of just $441 million in 2019; Charles Founded in 1947, River (CRL.N) is a global provider of laboratory animal and CRO services, achieving revenue of $2.9 billion in fiscal year 2020, of which $600 million is generated from animal models; Taconic, inc., founded in 1952, provides rodent laboratory animal models and related products and services primarily to pharmaceutical and biomedical companies in Europe and North America, with 2019 revenue of $202 million. The sales scale of the world's leading enterprises that have been established for more than 90 years is only more than 400 million US dollars, which shows that the main market of Nanmo Bio is small and the growth potential is relatively limited.
Technological sophistication "to be solved"
From 2018 to 2020, the average salary of nanmo's sales staff was 286,400 yuan, 310,500 yuan and 317,100 yuan, an average of 304,700 yuan, which was much higher than the corresponding level of comparable companies and local listed companies.
According to the prospectus, from 2018 to 2020, the average per capita compensation of sales personnel of comparable companies is 218,600 yuan, and the median average of local listed companies is 238,900 yuan, which is 28.26% and 21.6% lower than that of the company, respectively.
The company said that the average salary of sales staff is higher than the average of comparable companies, because the technical difficulty of the company's business is high, so the academic and professional requirements for marketing personnel are higher, and the master's degree or above is more than 50%. The company does not pay customers rebates or commercial bribes in disguise by paying salespeople high salaries.
However, unexpectedly, in the case of high technical difficulty in the main business, the salary level and education of the R&D personnel of Nanmo Bio are far less than those of the sales staff.
The second round of inquiry responses shows that as of the end of 2020, 84.91% of the company's sales personnel have a bachelor's degree or above, and the proportion of R&D personnel is 63.03%; among the sales staff, master's degree or above accounts for 66.03%, and the proportion of R&D personnel is only 19.33%; 15.1% of the sales staff have a college degree or below, and the proportion of R&D personnel with a college degree or below has reached 36.97%.
From 2018 to 2020, the average salary of the company's R&D personnel was 211,700 yuan, 195,800 yuan and 188,300 yuan, respectively, which was not only significantly lower than that of sales personnel, but also lower than management personnel. According to the prospectus, the average salary of the company's management personnel and the average salary of the company's employees during the reporting period were 244,900 yuan and 188,500 yuan respectively, and it can be seen that the average salary of the company's R & D personnel is relatively low, combined with the academic qualifications of the R & D personnel, how does the company's technological advancement reflected?
According to the prospectus, the core technologies of NAMMO include four kinds of gene editing technology based on CRISPR/Cas system, ES cell targeting technology, assisted reproductive technology, and gene expression regulation technology. In addition to gene expression regulation technology, the other three technologies are all optimization and innovation based on general-purpose tool technology, which is closely related to general-purpose technology.
Jicui Yaokang did not disclose the academic qualifications of its R&D personnel, but the overall academic level of its employees is better than that of Nanmo Biologics, accounting for 18.97% of the master's degree and above, 35.08% of undergraduates, 45.94% of college and below, and 16.12%, 24.07% and 59.81% of Nanmo Biologics, respectively.
This article originated from Securities Market Weekly