Event: the company released 2022 semi-annual report, achieving operating income of 130 million yuan (year-on-year + 6.7%) and net profit of 5 million yuan (- 81.6%); 22Q2 realized operating income of 57 million yuan (year-on-year-15.1%) and net profit of-9 million yuan (year-on-year).
East China is greatly affected by the epidemic and is optimistic about the recovery of downstream demand in the second half of the year. The reasons why the performance is affected: 1) from the middle of March to the end of May this year, the epidemic situation in Shanghai is serious, the company's main production base is located in Shanghai, and its customers are mainly in Shanghai and its surrounding areas, and external logistics is affected, which has a serious impact on the company's business development and shipments. 2) the increase in the number of cages leads to an increase in production costs. We believe that the short-term epidemic has only slowed down demand, and the company's operations have gradually recovered from June (industrial customers are expected to be followed by scientific research customers). We judge that the company's orders and revenue recognition will improve significantly in the third quarter.
The number of models continues to grow and overseas markets continue to expand. At the industry level, the model animal industry is currently in a high demeanor, the performance of the head company is expected to maintain a high growth trend in the future, and the sea logic is more smooth, we are optimistic about the long-term growth space of model animal enterprises represented by South Model Biology. (1) in terms of the number of models, as of 2022H1, the company independently developed more than 8000 standardized models and owned about 504 humanized models. (2) in terms of production capacity, the company's production scale doubled compared with the same period last year. In the future, as the base under construction is completed and put into production, the total number of cages is expected to reach 14 to 150000 cages. With the gradual release of production capacity, the company's revenue is also expected to grow at a high speed. (3) in overseas markets, the company has established preliminary cooperative relations with customers in the United States, Europe and Japan to provide them with genetically modified animal models and technical services.
Profit forecast and investment advice. Due to the impact of the COVID-19 epidemic, we estimate that the company's return net profit from 2022 to 2024 will be 0.711600 million yuan respectively, corresponding to the corresponding PE of 61-38-26, respectively. Taking into account the high growth stage of the model animal industry and the continuous expansion of overseas markets, we maintain a "buy" rating.
Risk tips: the risk of intensified market competition; the risk that overseas sales are not as expected; the risk that the progress of product research and development is not as expected.
