Because Munger said that oil would be the most scarce resource in the next 200 years, Berkshire continued to increase its Western oil holdings in large amounts.
Warren Buffett is still carrying out this decision, especially in June this year, when he invested $435 million to increase his position. Outside analysts say that Buffett's move not only prefers traditional industries, but also shows his "defensive" attitude, and Buffett values the scarcity of oil itself.
Oil, coal, electricity, minerals, precious metals, natural gas, etc. are recognized as scarce resources, especially at present, commodity prices are rising, Shaanxi Coal, China Shenhua, CNOOC, Zijin Mining, China Molybdenum, Yangtze River Power and other companies have attracted much attention.
In fact, there is a scarce resource in the pharmaceutical industry that we ignore, that is, blood products, which are supplied from human plasma and can only be completed by people donating plasma, which is an extremely special biological product.
The production and circulation of blood products and the establishment of plasma stations are strictly controlled, and the mainland has stopped issuing blood product business licenses since 2001, and the number of companies in the industry has only increased, thus bringing a natural "moat" to enterprises.
However, blood products are strategic reserve materials and essential drugs for first aid for major diseases, which are widely used in clinical treatment, and the annual plasma demand in the mainland exceeds 16,000 tons/year, and in the future, with the improvement of the medical level of the mainland and the aging process of the mainland, the demand for blood products will only increase.
As a result, the mainland blood products market has long been in short supply, with only 12,000 tons of supply.
The market size basically grew with the growth of pulp production, from 26.8 billion yuan to 51.2 billion yuan from 2016 to 2022, with a compound annual growth rate of 13.92%.
On this basis, A-share blood product manufacturers have also attracted much attention, with less than 10 companies in the industry, and the market competition is even better than that of hydropower and oil.
Among them, Palin Biotech had the best performance in the first quarter of this year, even surpassing Tiantan Biotech and Shanghai RAAS. The company's net profit and revenue growth rate were 116.31% and 67% respectively (deducting non-net profit growth rate of 196.85%), maintaining significant rapid growth, which is relatively rare in the entire pharmaceutical industry.
So how does it achieve growth?
First, the supply of blood products has increased significantly
In 2020 and 2021, the company successively reached pulp supply cooperation with Xinjiang Deyuan, and acquired Paisfico to achieve an increase in plasma and plasma stations.
The number of pulp stations of the company has increased from 13 to 38, ranking third in the industry, and the pulp production volume has reached the first echelon in China, exceeding 1,200 tons in 2023, but it has not surpassed Hualan Bio, which ranks fourth in the industry in terms of the number of pulp stations.
Therefore, from 2020 to 2023, the performance of Palin Biotech has achieved significant growth, and because there are 6 new pulp stations in 2023, coupled with the external environmental disturbance in the first half of last year, it will enter the stage of rapid volume expansion in 2024.
The revenue increased from 1.05 billion yuan to 2.329 billion yuan, but the growth rate was still smaller than the growth of the pulp station, but the net profit grew faster, with a compound growth rate of 39.85% from 2020 to 2023.
Second, the scale advantage continues to increase
Scale advantage refers to the increase in enterprise output and the reduction of unit costs to improve operating efficiency, which will increase the company's gross profit margin.
It's just that if the output growth is not matched by sales, the gross profit margin growth alone will not work, so while the sales volume increases, the overall efficiency of the general company will also improve and drive the growth of net profit margin.
From 2020 to 2023, the gross profit margin and net profit margin of Palin Biotech have maintained continuous growth, especially the net profit margin has increased significantly due to the decline in the expense ratio during the period, reaching a new high of 27.97% in the first quarter of 2024, while the gross profit margin has also remained at about 51%.
The profitability of Palin Biotech is superimposed on the scarcity of resources, market competition barriers and technological advantages, which not only makes it a leader in the pharmaceutical industry, but also has a higher gross profit margin and net profit margin than Yangtze Power.
So in the future, how do you see the growth of Palin Biotech?
The answer can be obtained from the analysis of both the industry and the company.
1. Industry level
The blood products industry has shown irreversible growth in demand, and even seen a rise in volume and price in this context.
There are three main categories of blood products in mainland China, albumin, intravenous propylene and coagulation factors, which account for about 59%, 21% and 7% of the market respectively, among which albumin and intravenous propylene are the main sources of revenue for Palin Biotech.
However, compared with the international market, there are still two major gaps in the mainland blood product market, one is that in the albumin market, the proportion of imported products is still very high (about 50%-60%), and the other is that the market proportion of static propylene and coagulation factors is obviously small, and albumin is the third largest category of products.
It can be seen that the development trend of mainland blood products companies is still very clear, and they will strengthen the expansion of new product categories while increasing the supply of products, and there is room for improvement in both the stock market and the incremental market.
Moreover, the supply as the core contradiction is also being supported to solve, and various regions are actively promoting the establishment of pulp stations, but as far as the current industry inventory (relatively low) is concerned, the relationship between supply and demand may be difficult to improve quickly, so that the product has a certain price increase logic.
As of 2023, the inventory turnover rate of the A-share blood products industry will reach 2.37 times, and the sales of products are good, so the overall price of products will remain relatively stable, and even some products will continue to increase in price.
2. At the company level
From the previous analysis, it can be seen that the short-term growth certainty of Palin Biotech is high, and in addition, the entry of Shaanxi Coal Group (state-owned assets) in 2023 is also expected to further open up the company's growth space.
The company's own growth has three logics:
(1) The amount of pulp production and the number of pulp stations will continue to grow, according to the standard that the single pulp mining station is not famous, each pulp station will produce at least 30 tons of plasma, so according to the number of the company's 38 pulp stations, plus the annual supply of at least 200 tons of pulp from Xinjiang Deyuan (partner), a total of 1340 tons, but 30 tons and 200 tons belong to a bottom line, not to mention that with the addition of Shaanxi Coal Group, the company is also expected to expand new pulp stations in Shaanxi Province and provinces along the Yangtze River.
(2) The company continues to enhance its R&D strength and expand new products, especially high value-added products, which can not only expand the company's scale but also increase unit profits.
At present, the number of the company's blood products is 11, and there are nearly 10 products under development, although from the perspective of the industry, the differentiated layout of Palin products is not obvious, but there are still products worth looking forward to in the future research pipeline, a new generation of intravenous human immunoglobulin, human coagulation factor IX., human fibrinogen, human fibrin adhesive, etc., thereby narrowing the gap with domestic and foreign leaders.
(3) Whether from the perspective of the company's own operation or Shaanxi Coal's ownership, it is expected that the profitability of Palin Biotech may still have room for improvement, and the increase in the dividend rate is not excluded, which will enhance the company's intrinsic value.
In general, Palin Biotech has outstanding growth, and as a blood product company, it is the only special scarce resource in the pharmaceutical industry, and it is not inferior to Yangtze Power in terms of growth logic and core competition.
As a result, Palin Biotech attracted 331 institutional positions at the end of 2023, and the number of institutions holding positions in the first quarter of this year also increased significantly by more than three times compared with last year (according to disclosed data).
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Source: Flying Whale Investment Research