Key points of investment
Dyne Pharmaceuticals performed steadily, and its overall performance was dragged down by non-main businesses. In Q1 of 2023, the company achieved revenue of 561 million yuan, a decrease of 7.28% from the previous year, and the net profit of the mother was 164 million yuan, an increase of 4.94% over the previous year, after deducting non-net profit of 154 million yuan, a decrease of 1.02% over the previous year. The apparent performance was slightly lower than market expectations, mainly due to the drag of non-main business. Net operating cash flow was $335 million, a year-on-year increase of 21.41%, with healthy cash flow; year-end contract liabilities amounted to $202 million, an increase of 24.68% over the end of 2022.
The high base figure was issued because the pharmaceutical industry is still performing steadily. The subsidiary Dyne Pharmaceutical achieved operating income of 550 million yuan in Q1, an increase of 2.98% over the previous year, and net profit of 315 million yuan, an increase of 10.13% over the previous year. The company adheres to its strategic positioning. Facing the severe and changing new market and environment, the company closely focuses on strategic goals, takes the initiative to meet new challenges, and steadily advances various tasks. The net profit margin of Dyne Pharmaceutical's subsidiary was 57.27%, an increase of 3.71 pct over the previous year, further improving profitability.
Non-main businesses are being dragged down, and it is expected that the education business will be divested at an accelerated pace. The total revenue of businesses other than Dyne Pharmaceutical in Q1 2023 was only $11 million, a year-on-year decrease of 84%, and a total loss of 52 million yuan, dragging down consolidated statements. The company's 49% stake in Walter Environmental caused an investment loss of 2,765,400 yuan in the first quarter; the divestment of Wolong School is expected to accelerate during the year.
Profit forecast and valuation: Maintaining the profit forecast, net profit attributable to the mother for 2023-2025 is estimated to be 651, 7.98, and 965 million yuan respectively, up 23.6%, 22.5%, and 20.9% year-on-year. The corresponding PE for the closing price on April 14, 2023 is 13.7, 11.1, and 9.2X, maintaining the “increase in holdings” rating.
Risk warning: Risks such as price reductions in product collection, falling short of expectations, negative public opinion, fluctuations in the number of births, increased competition, and fluctuations in raw material prices.