Event description

According to the company's semi-annual report for 2022, the operating income was 130 million yuan, an increase of 6.73% over the same period last year, and the net profit was 4.884 million yuan, a decrease of 81.64% over the same period last year. The net profit after deducting non-return was-7.14 million yuan, a decrease of 129.36% compared with the same period last year, and the corresponding EPS was 0.06 yuan.

Event comment

Affected by the COVID-19 epidemic, income growth slowed down. It was greatly affected by COVID-19 's epidemic situation. From the middle of March to the end of May in 2022, the epidemic situation of COVID-19 in Shanghai was grim, and the global static management was gradually implemented. As the company's main production base is located in Shanghai, a large number of customer groups are also concentrated in and around Shanghai, but affected by external logistics control, as well as customers affected by the local implementation of control measures can not normally operate to receive mice, during the epidemic in Shanghai, the company in addition to a small number of non-local customers can deliver goods, customers in Shanghai area delivery difficulties. Although the company has fully resumed work and production since June, some revenue recognition has been delayed due to the dissent period, and the customer payback process has been blocked under the impact of the epidemic. On the whole, the revenue side of the company has been greatly affected in the second quarter.

Product sales were dragged down by the epidemic, and the breeding business grew steadily. During the reporting period, the revenue of the company's main business reached 129 million yuan, an increase of 6.31% over the same period last year. From the perspective of the separation of different business sectors: 1) the customized model achieved income of 9.494 million yuan, a decrease of-46.9% over the same period last year. Universities and scientific research institutes are the main audiences of this business segment, and its strict control under the epidemic has significantly hindered the revenue growth of this sector. 2) income from standardized model is 41.235 million yuan, up 3.88% over the same period last year; 3) income from model breeding is 44.411 million yuan, up 35.7% from last year; 4) income from efficacy evaluation and phenotypic analysis is 20.236 million yuan, up 13.11% from last year; 5) revenue from feeding services is 12.758 million yuan, an increase of 2.39% over the same period last year.

Production capacity is gradually expanding, and innovation drives new product research and development. The model animal industry is in the business cycle, and the company is also in the stage of rapid growth. In order to meet the growing market demand, the company actively expands its production capacity to provide adequate follow-up protection for production and sales.

In mid-2021, the number of cages in the company was about 50,000. In the second half of 2021, the Jinshan base of the fund-raising project was completed and put into production, adding about 50,000 cages. In the first half of 2022, the Zhongshan base in Guangdong was put into production, adding about 9,000 cages (about 40%). In the future, with the renovation and completion of the base under construction, the total number of cages in the company is expected to reach 140,000 to 150,000 cages. The company persists in scientific research and innovation and independently develops more than 8000 standardized animal models. it is worth noting that by the end of the reporting period, the company has 504 humanized models with popular targets such as PD-1, CTLA-4, CD47 and CD24, and the proportion of humanized multiple targets has also increased. In terms of overseas business, 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. the company is expected to gradually open overseas markets by virtue of price advantages, customer word-of-mouth, humanized mouse models and other characteristic products.

The company's operating income from 2022 to 2024 is expected to be 320 million yuan, 433 million yuan and 592 million yuan, an increase of 16.4%, 35.1% and 36.8% over the same period last year, and the net profit of its parent is 71 million yuan, 97 million yuan and 136 million yuan, an increase of 16.5%, 37.2% and 39.9% over the same period last year. The current stock price corresponds to 74 times, 54 times and 38 times of PE, respectively, maintaining the "buy" rating.

Risk hint

1. COVID-19 's epidemic situation has a negative impact on the company's operation.

2. the competition in the industry has intensified.

3. Risk of failure in new product research and development

4. The growth rate of the industry has slowed down, and the performance growth has fallen short of expectations.