Company Profile

BGI Genomics Co. is a leading provider of genomic and proteomic sequencing services primarily to academic institutions, pharmaceutical companies and healthcare providers. The company also provides genomic solutions for biomarker research and development, screening for some of the trisomies present at birth (trisomy 21, trisomy 18 and trisomy 13) and solutions for neo-antigen identification for immuno-oncology research. (Source: Reuters)

Event

Unaudited performance was in line with expectations with divergence in businesses.

Recently, BGI Genomics (the company) announced its 2021 preliminary financial report, forecasting its revenue of CNY 6.55 billion~ CNY 6.85 billion (down 18.4% ~22.0%); its net profit attributable to shareholders is estimated to come in at CNY 1.4 billion ~ CNY 1.6 billion (down 23.5%~33.0% from a year earlier).

Deducting business related to COVID-19, the company’s revenue of its reproductive health, infection prevention and control, multi-omics data services and compound business was basically in line with that a year ago; tumor prevention and control and comprehensive solutions for precision medicine based on regular business posted an increase compared with a year prior; the company’s performance was in line with expectations.

Comments

With stepped-up efforts in globalization, the company has pressed ahead development of its products and channels.

In the reporting period, the company has continued to push its regular products to go abroad, with testing kits including thalassemia gene testing, drepanocytemia gene testing, intestinal cancer auxiliary diagnosis, lung cancer ctDNA and solid tumor polygenes testing, obtaining CE certification and overseas market access.

The company has ramped up input in channel building in an attempt to expand its global market channels.

It further promotes its technological development and product layout.

In the reporting period, the company’s R&D expense rate remained stable compared with the same period in 2020.

The technological development and product layout have achieved aggressive progress in multiple businesses, with new products launched and upgraded in reproductive health, infection prevention and control, tumor prevention and control, multi-omics data services and compound business.

Earnings forecast and investment recommendation

We revised our earnings forecasts and estimated its net profit attributable to shareholders at CNY 1.510 billion in 2021, CNY 1.158 billion in 2022 and CNY 1.064 billion in 2023, implying a price-to-earnings ratio of 22.8x, 29.7x and 32.3x, respectively, based on the closing price on Jan. 27th. Reiterate "Outperform".

Potential risks

overseas business risks; IPR disputes; intensified competition; performance fluctuations