Guotou Securities: Independent and controllable trends deepen, domestic manufacturers usher in major development opportunities

Guotou Securities released a research report stating that the current scientific research instrument industry faces a high dependency on imports, large trade deficits, and low localization rates, but is accelerating industry transformation. Geopolitical factors further emphasize the urgency of autonomous and controllable industrial chains. In this context, domestic scientific research instrument manufacturers are expected to usher in development opportunities, including high-end instrument manufacturers, pharmaceutical research and development equipment suppliers, and core component companies. At the same time, the field of scientific research reagents and laboratory consumables may accelerate localization due to high import substitution space and high repurchase rate. Guotou Securities' main points are as follows: Scientific research instruments: The core track of autonomous and controllable is the main line, under the multiple influences of US export controls and equivalent tariffs, domestic manufacturers have ushered in a historic development opportunity. 1. Status: High import dependence, large trade deficits, low localization rate. According to data from the General Administration of Customs and the Instrument Information Network, China's scientific instrument imports amounted to approximately $17 billion in 23 years, with exports of approximately $4.3 billion, resulting in a large trade deficit. High-end areas such as mass spectrometers, chromatographs, and spectrophotometers are dominated by imported brands in the market. The localization rate of scientific research instruments is generally low. 2. Marginal: Under the strengthened export controls on scientific instruments by the United States, as well as factors such as equivalent tariffs, the importance, urgency, and strategic significance of autonomous and controllable industrial chains in the domestic scientific research instrument industry have once again increased. In January 2025, the US Department of Commerce issued targeted export controls on key categories of scientific instruments, including high-parameter flow cytometers and liquid chromatography-mass spectrometry systems. On April 11, China's State Council Tariff Commission announced that starting from April 12, 2025, the tariff rate on imported goods from the US would increase from 84% to 125%. The necessity and strategic significance of autonomous and controllable industrial chains in the domestic scientific research instrument industry have once again been heightened. 3. Outlook: The strengthened US export controls on scientific research instruments and recent changes in international tariff policies have increased the difficulty and cost of procuring imported scientific research instruments. The market landscape, previously dominated by imported brands, is expected to undergo rapid reshaping, and domestic manufacturers in three sub-sectors are likely to encounter significant development opportunities under this background: (1) Scientific research instrument manufacturers such as Focused Photonics, Beijing LabTech Instruments, Qingdao Haier Biomedical Co., Ltd., and Guangzhou Hexin Instrument; (2) Drug research and production equipment manufacturers such as Tofflon Science and Technology Group and Truking Technology; (3) Instrument equipment industry chain key component manufacturers such as iRay Group. Scientific research reagents and laboratory consumables: Imports from the US may be affected, and domestic substitution is expected to accelerate. From the perspective of imports and exports, companies with a high proportion of US business may be damaged. After China imposes equivalent tariffs, theoretically, American companies' product imports into China will also be affected, and domestic products are expected to undergo a faster process of substitution. The bank believes that scientific research reagents and laboratory consumables (high repurchase frequency, short-term realization may be quick) are expected to accelerate localization. In the field of laboratory consumables, the localization rate of key consumable products such as chromatography fillers and disposable plastic consumables is low, and US companies Cytiva, Thermo Fisher Scientific, Bio-Rad, etc., occupy a large market share; in the field of scientific research reagents, the localization rate of biological research reagents is only about 10%, with foreign investment accounting for about 90%, represented by US companies such as Thermo Fisher Scientific and R&D Systems. Income structure data of domestic listed companies in the field of scientific research reagents and consumables show that most companies mainly focus on the domestic market, with small proportions of export business, especially those exporting to the US. If in the long run, competitors importing from the US into China are affected, they are expected to benefit from the acceleration of the localization substitution process. Considering the small proportion of US business and strong domestic elasticity, the bank believes that stocks benefiting from this include Suzhou Nanomicro Technology, Suzhou Sepax Technologies, Shanghai Aladdin Biochemical Technology Co., Ltd., Nanjing Vazyme Biotech, Shanghai OPM Biosciences, Shanghai Titan Scientific Co., Ltd., and so on. Risk Warning: Uncertainty in global trade policy, uncertainty in the pharmaceutical industry policy, uncertainty in technology research and development.