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Rendu Biotech’s IPO on the Sci-tech Innovation Board: How to solve the risk of performance fluctuations caused by the epidemic?

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On June 18, Capital State learned that the sprint IPO of Shanghai Rendu Co., Ltd. (hereinafter referred to as “Rendu Bio”) was accepted by the Shanghai Stock Exchange, and this time it plans to raise 701 million yuan.

Image source: Shanghai Stock Exchange official website

The company develops, produces and sells molecular diagnostic reagents and equipment integrated products based on this, focusing on precise diagnosis, effective prevention and control, and personalized diagnosis and treatment of pathogens in the fields of reproduction, breathing, digestion, blood, food, environmental safety, etc. provide the solution.

Picture source: company prospectus

Financial data shows that the company’s revenue in 2018, 2019, and 2020 were 69,343,400 yuan, 99,168,100 yuan, and 250 million yuan, respectively; during the same period, the corresponding revenues were -32,0512 million, 3,379,200 yuan, and 61,376,500 yuan respectively. After the non-deduction, both 2018 and 2019 lost money.

In 2020, the issuer will realize RMB 249,903,400, net profit of RMB 61,376,500, net profit after deduction of RMB 53,281,600. Based on the company’s latest external situation and the valuation of comparable companies in domestic and overseas markets, the issuer expects the valuation to be no less than RMB 1 billion.

The issuer’s selection criteria for listing is Article (1) stipulated in Chapter 2.1.2 of the “Shanghai Science and Technology Innovation Board Stock Listing Rules”: the estimated market value is not less than RMB 1 billion, and the net profit in the most recent year is positive and operating The income is not less than RMB 100 million. This fundraising is planned to be used for industrialization R&D projects of precision diagnostic reagents and smart equipment, and marketing network construction projects. Picture source: company prospectus Rendu Biotech is backed by Suzhou Qiming, Yida Talent, Jinxin Venture Capital, etc. Rendu Biotech frankly stated that the company faces the following risks: (1) New product development risks The issuer’s in vitro diagnostic industry is a typical technology-driven industry. The research and development of new products has the characteristics of strong technical integration, large capital investment, and long cycle. Whether the company can continuously develop new products that meet market needs is whether the company can One of the key factors for maintaining a leading position in industry competition. Therefore, in the process of new product development, the issuer may face the risk of R&D failure due to deviations in the R&D direction, slow R&D process, and high R&D investment costs. (2) Risk of falling product prices According to the current relevant national regulations, the highest price standards for non-profit medical institutions that enter the “Clinical Testing Project Catalog” are set and adjusted by the local price authorities. With the deepening of the national medical reform and the further adjustment of relevant policies and regulations, the relevant competent authorities may lower the prices of some test items. With the further deepening of my country’s medical treatment, the company’s product sales prices may be affected by policy factors such as bidding policies and hospital procurement regulations. In addition, with the increase of market participants and the intensified competition, the price of corresponding diagnostic reagent products will also be lowered. If the company cannot continue to increase R&D investment and launch new products in the future, or is affected by factors such as government price adjustments, bidding policies, and market competition, the company will face risks related to product prices. (3) New technology market acceptance risk During the reporting period, the issuer focused on RNA molecular diagnostic technology and products, and its main business was R&D, production and sales of molecular diagnostic reagents and equipment integrated products based on the RNA real-time fluorescent constant temperature amplification technology (SAT) platform. Compared with the DNA molecular diagnostics that appeared in the 1980s and 1990s, RNA molecular diagnostics appeared later, and the current market awareness is low. The proportion of RNA in the field of infectious molecular diagnostics in China is only 6%, and the penetration rate is relatively low. 25% in developed markets in the United States is lower. At the same time, unlike the development path of DNA molecular diagnostics used by comparable listed companies in the same industry, the issuer focuses on RNA molecular diagnostics. If the company’s market development and academic promotion are insufficient in the future, the market structure and needs change, the company cannot successfully achieve market promotion, or the clinical market fails to be more familiar with and accept the company’s RNA molecular diagnostic products, this will result in the company’s market development, which may affect the company. The future and sales growth will have certain adverse effects. (4) The risk of performance fluctuations caused by the new coronavirus epidemic At the beginning of 2020, the new coronavirus epidemic broke out in my country. The issuer successfully developed a new coronavirus 2019-nCoV nucleic acid detection kit with high-throughput automatic detection equipment based on a systematic technology platform and an efficient R&D system. And through the emergency approval of the State Drug Administration, the registration certificate was obtained on March 26, 2020. Combined with the company’s fully automatic nucleic acid detection and analysis system, it can realize the automatic, integrated, and on-the-go detection of new coronavirus detection. It is an enterprise that realized the automatic detection of new coronavirus early in China, and it is rapidly mass-produced for the prevention and control of new coronary pneumonia. make a contribution. The company’s new crown detection kit revenue in 2020 will be 68,507,400 yuan, accounting for 27.41%. With the advent of the new crown vaccine and the effective control of the epidemic by government departments, the company’s new crown detection kit income is at risk of decreasing. Hospitals at all levels across the country actively responded to the call of the state in the early stage of epidemic prevention and control, and invested a large number of medical staff and health resources in the epidemic prevention and control battle, causing their normal diagnosis and treatment business to be suspended. Since the company’s reproductive tract and intestinal products are mainly used in hospital reproductive departments, pediatrics and other departments, during this epidemic, in order to concentrate efforts to fight the epidemic and reduce the risk of cross-infection in the hospital, the above departments were partially or completely closed, resulting in The sales of related products of the company will be affected to a certain extent in the short term. At present, the new coronavirus epidemic has been effectively controlled nationwide, but the impact of foreign epidemic outbreaks, imported cases and virus mutations may lead to greater uncertainty in the epidemic, which will cause fluctuations in the company’s business performance growth. (5) Risks of investment projects with raised funds The funds raised by the company this time are mainly used for industrialization R&D projects of precision diagnostic reagents and intelligent equipment and marketing network construction projects. The construction of the above-mentioned fund-raising investment projects will enhance the company’s in vitro diagnostic reagent product structure, and at the same time, through the update and upgrade of instruments, it will effectively enhance the market competitiveness of the company’s products, increase the company’s sales scale and thereby enhance the company. Although the company has conducted a prudent feasibility demonstration for the raised funds investment projects, due to the large amount of funds raised, if the raised funds are not in place as scheduled, the project implementation organization is poorly managed, or the downstream market demand changes adversely, the raised funds will be affected. The construction progress and investment benefits of capital investment projects have an adverse impact. In addition, the issuer’s raised funds investment project will significantly increase R&D investment and marketing team building expenses in the early stage of construction. There is a risk that the company’s profitability will decline due to increased expenses. At the same time, the company’s net assets will increase significantly. Since it takes a certain amount of time from the beginning of the implementation of the fund-raising investment project to produce the expected benefits, the company has the risk of a decline in the return on net assets