At present, domestic high-end reagents are still mainly imported enterprises, and there is a wide space to replace them, while Aladdin is a leading manufacturer of scientific research reagents in China. In the short term, with the disturbance factors gradually eliminated, the company is expected to resume rapid growth; in the medium to long term, the company has persisted in building its own brand of independent scientific research reagents, "import substitution" as its own responsibility, focusing on innovative research and development; at present, the company's brand enjoys a good reputation and plans to develop more than 30,000 SKU in the next three years. Combined with the first-mover advantages of the company's e-commerce platform, it is expected to speed up the march into the field of life science reagents, which is expected to further boost the expansion of the company. To sum up, we give the company 51 times PE in 2022, corresponding to the target price of 45 yuan, maintaining the "overweight" rating.

The company maintained rapid revenue growth in the first three quarters. In the first three quarters of 2022, the company achieved operating income of 266 million yuan, an increase of 34.45% over the same period last year, a net profit of 66 million yuan, an increase of 10.08% over the same period last year, and a net profit of 61 million yuan, an increase of 5.37% over the same period last year. In a single quarter, the company's 2022Q3 achieved operating income of 88 million yuan, an increase of 26.40% over the same period last year; net profit of 15 million yuan, down 16.26% from the same period last year; and net profit of 15 million yuan, down 17.00% from the same period last year. Among them, on the profit side, we expect equity incentive amortization expenses of about 80 to 9 million yuan in the first three quarters. Excluding the impact of equity incentives, we expect the company's net profit to grow by more than 20% in the first three quarters, and the net profit in Q3 alone is basically the same as in the same period last year.

Multiple factors disturb the profitability of the company, and the follow-up impact is expected to be gradually eliminated. The company's gross profit margin in the first three quarters of 2022 was 58.91%, down 4.64pcts from the same period last year. We believe that the decline in gross profit margin is mainly due to the increase in the cost of raw materials, the increase in freight charges for product sales and the adjustment of dealer preferential policies, with a net profit rate of 24.67%. Year-on-year decline of 5.46 2.09/-1.97/+2.54/+1.42pcts-the company's sales expense rate / management expense rate / R & D expense rate / financial expense rate in the first three quarters respectively changed compared with the same period last year + PCT (cumulative increase in 4.08pcts).

In a single quarter, the company's Q3 gross profit margin was 57.30%, down 4.23pcts from the same period last year, and the net profit rate was 17.30%, which was 9.80% lower than the same period last year. Q3 company sales expense rate / management expense rate / R & D expense rate / financial expense rate changed + 4.20/-3.11/+2.69/+1.85pcts (cumulative increase in 5.63pcts) compared with the same period last year.

Investment in R & D continues to increase, and category / inventory increases steadily. The company is actively expanding the research and development capacity of new products SKU/, as well as the national warehousing spot service capacity, and the R & D personnel / investment shows a rapid growth trend-- the company's R & D investment in the first three quarters of 2022 is about 26.82 million yuan, an increase of 79.56 percent over the same period last year; in terms of balance sheet, the company's inventory continued to increase, reaching 332 million yuan at the end of the third quarter of 2022, an increase of 127.87 percent over the same period last year. In the long run, the "Aladdin" brand has enjoyed a good reputation and brand awareness among its customers. On the one hand, the company strives to develop more than 30,000 SKU in the next three years, further enriching the existing product line; on the other hand, the company is also speeding up its march and layout into the field of life science reagents / internationalization. We believe that the continuous increase in category / inventory is expected to drive the company's performance to grow steadily in the future.

Risk factors: the risk that the market competition will lead to the decline of gross profit margin; the SKU expansion of the company's products is not as expected; the risk of rising labor costs and brain drain; the risk of rising raw material costs.

Profit forecast, valuation and rating: at present, domestic high-end reagents are still dominated by imported enterprises, and Aladdin is a leading manufacturer of scientific research reagents in China. In the short term, as the disturbance factors gradually eliminate, the company is expected to resume rapid growth; in the medium to long term, the company has persisted in building independent scientific research reagent brands since its inception, "import substitution" as its own responsibility, focusing on innovative research and development. At present, the company's brand enjoys a good reputation and plans to develop more than 30,000 SKU; in the next three years. Combined with the first-mover advantages of the company's e-commerce platform, the company will speed up its march into the field of life science reagents, which is expected to further boost the company's scale expansion. To sum up, taking into account the changes in the increase of equity and the fluctuation of gross profit margin under the influence of the local epidemic, we adjust the company's EPS forecast from 2022 to 2024 to 0.78 EPS 1.08cm 1.42 yuan (the original forecast is 0.80x1.15max 1.51 yuan), and the current price corresponds to 51X/37X/28X respectively. We refer to the current comparable companies (Titan Technology, Haoyuan Pharmaceutical, Jet Biology, Drug Stone Technology, etc.; based on Wind consensus expectations), give the company an average of 57 times PE in 2022, give the company 51 times PE in 2022, corresponding to the target price of 45 yuan, and maintain the "overweight" rating.