Huada Zhizao'S Impact On The Science And Technology Innovation Board: The Epidemic Situation Drives The Growth Of Demand, With Revenue Exceeding 1.7 Billion In September

The IPO rumors of Huada Zhizao, the leader of domestic gene sequencer industry, have finally come to the ground.

On the evening of December 7, the Shanghai Stock Exchange disclosed that the IPO of Shenzhen Huada Zhizao Technology Co., Ltd. (hereinafter referred to as "Huada Zhizao") was accepted. The company plans to issue no more than 41.32 million shares and no less than 10% of the total share capital of the company after the issuance. The company plans to raise 2.528 billion yuan.

Founded in 2016, huadazhi focuses on the field of life science and biotechnology, focusing on the R & D, production and sales of equipment, reagent consumables and other related products, providing real-time, panoramic, full life cycle digital life equipment and system solutions for precision medicine, precision agriculture, precision health and other industries. At present, the two business segments of BGI are gene sequencer business and laboratory automation business.

Earlier, there was market news that Huada group was considering listing Huada Zhizao on the science and technology innovation board as early as this year, and planned to raise $1 billion through IPO. Like Huada gene, a listed company, Huada Zhizao is also a subsidiary of Huada group.

It is worth noting that before the preparation for listing, Huada Zhizao has completed two rounds of financing. On May 28, this year, Huada Zhizao announced that it had completed more than US $1 billion in round B financing; on May 9, 2019, Huada Zhizao disclosed that the scale of the first round of financing exceeded US $200 million.

Illumina is the biggest competitor

"There was a news that Huada Zhizao went to Hong Kong stock market earlier, but it finally chose the science and technology innovation board. It may be considered that the domestic market valuation is higher, and its sequencer plate has received the most attention." A reporter of the 21st century told a reporter in Shenzhen.

According to the prospectus, the main business income of Huada Zhizao comes from the sales of instruments and equipment, reagents and consumables and related supporting services. The main business contributes significantly to the company's performance. During the reporting period, the main business income was 487 million yuan, 805 million yuan, 1083 million yuan and 1.732 billion yuan, accounting for 60.52%, 73.37%, 99.23% and 99.57% of the operating income respectively.

In the field of gene sequencing, in addition to Illumina, the world's two largest manufacturers with independent production capacity, are Huada intelligent manufacturing, which acquired sequencer technology from CG (complete genomics) in the early years.

In the early years, as the field of second-generation sequencing was monopolized by Illumina, a US company, BGI, which was in the midstream gene sequencing OEM industry, was always constrained by Illumina, an industry giant.

In 2010, Huada purchased 128 high-throughput sequencers from Illumina, making it the world's largest gene sequencing organization. However, Illumina immediately announced that the price of its matching reagents had increased, forcing Huada to embark on the road of independent research and development of domestic sequencer. Huada's sequencer technology was acquired from complete genomics, a US listed sequencer. Although the acquisition was a helpless move at that time, and some people in the industry said that there was a big gap between CG's sequencer technology and Illumina's, the acquisition was still regarded as "the Chinese took away the Coca Cola formula of the gene sequencing industry from the United States".

According to the prospectus, Huada Zhizao has closely followed the development trend of "miniaturization" and "ultra-high throughput" of gene sequencers. It has developed small and medium-sized desktop sequencers and large and super large sequencers, and has established a full series of multi model product matrix, which can meet the needs of users in different application scenarios.

Among them, it is mainly used in large and medium-sized genome sequencing projects, such as large-scale genome sequencing, desktop genome sequencing and large-scale genome sequencing. In terms of sequencing related reagents, the company has developed a wealth of kit consumables for library preparation and gene sequencing according to customer requirements.

From 2017 to January to September 2020, the revenue of the company's gene sequencer business segment was 469 million yuan, 778 million yuan, 1001 million yuan and 433 million yuan respectively. From 2017 to 2019, the company's business income of gene sequencer showed a rapid growth trend, with an average annual compound growth rate of 46.16%.

In terms of technology research and development, the prospectus shows that at the end of the report period, R & D personnel accounted for about 34% of the total number of employees, of which more than 51% of the company's R & D personnel have master's degree or above.

From 2017 to January September 2020, the company's R & D expenses were 245 million yuan, 254 million yuan, 343 million yuan and 486 million yuan, accounting for 30.54%, 23.11%, 31.46% and 27.96% of the operating revenue.

In terms of competitors, according to the financial report, Illumina's annual revenue in fiscal year 2019 reached $3.5 billion, of which the revenue of Greater China region was $372 million, accounting for 10.5%, and other income of Asia Pacific region was $268 million, accounting for 7.6%.

In addition, according to Illumina's official information, more than 15000 Illumina sequencing platforms have been put into use in various countries around the world, and more than 250000 articles are based on the data generated by imena's sequencing technology. As of July this year, more than 55 laboratories in China have published new coronavirus gene sequences on various platforms using ngs method, and more than 80% of the studies have used Illumina technology platform.

At present, Illumina is still in an advantageous position in the Chinese market. Many gene testing companies and official institutions are Illumina's customers. In April this year, China CDC purchased Illumina's products through bidding, which was publicly questioned as "targeted procurement" by Huada Zhizao.

Outstanding performance during the epidemic period

Since the outbreak of new coronavirus pneumonia, nucleic acid detection is an important diagnostic basis for clinical diagnosis, isolation, rehabilitation and discharge.

According to the prospectus, in 2020, the new type of coronavirus pneumonia outbreak in the world, and the export sales of laboratory automation instruments and reagent consumables related to the fight against the new coronavirus epidemic increased significantly, which played a significant role in promoting the company's performance this year. The company's annual performance in 2020 is expected to increase significantly compared with the previous year.

Among them, from January to September 2020, the company's laboratory automation business revenue reached 1.272 billion, accounting for 73.41% of the total revenue, which has become an important engine to promote the company's performance growth.

In the context of normalization of epidemic prevention and control, in August this year, the world's first fully automatic cup separation processing system mgistp-7000, independently developed by Huada Zhizao, was approved for listing. The system can complete the single sample sub loading in 15 seconds, which greatly improves the sample processing throughput with the advantages of automation and intelligence.

While focusing on developing domestic business, the company's global business also showed a good development trend during the reporting period.

However, according to previous experience, the duration of the epidemic can not be accurately estimated. If the epidemic situation is effectively controlled worldwide, the sales volume of the above-mentioned related products of the company will decline, which will cause the risk of future performance fluctuation of the company to a certain extent.

In addition, there are also concerns in the industry that Huada Zhizao will have horizontal competition with China gene group. However, Huada intelligent manufacturing and its subsidiaries are positioned in the high-end equipment manufacturing industry, focusing on the R & D, production and sales of instruments and equipment, reagent consumables and other related products in the field of life science and biotechnology.

In the past years, the journal has further enhanced the ability of global scientific research institutions to identify the number of products and consumables in the global market, and to maintain the capability of global scientific research institutions in the global market. It is estimated that by 2030, the global market for gene sequencers and consumables will reach US $24.58 billion, and that of China will reach RMB 30.39 billion.

In addition, the "healthy China action" outlines that the overall cancer survival rate in China will not be less than 46.6% by 2030. In order to achieve this goal, in addition to prevention and early screening and early diagnosis, accurate cancer treatment will be an important development direction, and tumor gene detection is the basic demand.

In the future, as the only company in China that can mass produce clinical sequencer, the prospect of BGI is promising.