Event: The company released the first quarter report of 2023. In the first quarter of 2023, the company achieved revenue of 56.8844 million yuan, an increase of 17.84% over the previous year; Guimu's net profit was 1,299 million yuan, which changed from negative to positive year on year, after deducting net profit of 1,4607 million yuan from non-return mother's net profit, which changed from negative to positive year on year.

Comment:

Sales increased in the first quarter, and revenue and profit increased steadily: the company achieved revenue of 56.884 million yuan (YOY +17.84%) in the first quarter of 2023; net profit of the mother was 1,299 million yuan, after deducting the net profit of the non-Gwo mother of 1,467 million yuan.

Compared to the same period last year, Guimu's net profit changed from negative to positive due to an increase in 2023Q1 sales volume compared to the same period last year. In addition, the net cash flow from the company's operating activities in the first quarter was 366.1111 million yuan, an increase of 1,153.46% over the previous year. The main reason was that the cash received from selling products and providing labor services in the current period increased compared to the same period last year.

R&D investment has maintained a high proportion, and solid tumor technology has been certified: 2023Q1. The company invested 14.4361 million yuan in R&D, accounting for 25.38% of revenue. The company mainly provides accurate testing for genes and antigens in the fields of hematologic diseases, solid tumors and infectious diseases. In the field of solid tumors, the human MET gene amplification test kit (digital PCR method) developed by the company was selected as one of the “Top Ten Innovative Technologies/Products for Tumor Markers” in April 2023. This product can provide clinicians with reference opinions on the treatment of patients with non-small cell lung cancer in choosing tumor-targeted drugs. This shortlist certifies the company's rich accumulation and experience in digital PCR products, and it is expected that the company will continue to strengthen its competitiveness in this field in the future.

Strategic cooperation is progressing steadily, and the new base provides a strong guarantee: in the first quarter of 2023, the company steadily promoted various strategic cooperation. During the reporting period, the company reached cooperation with Guoyao Shengkang and Heshuo Medical, a third-party pharmaceutical marketing service platform founded by Jianyi Capital, and cooperated with Aidu Medical to promote rapid entry into clinical trials of new anti-cancer drugs. At the same time, the company signed a contract with Peking University's Chongqing Big Data Research Institute. The two sides will jointly establish a “Joint Laboratory for Genetic Intelligence Big Data”, focusing on scientific research cooperation in the fields of blood systems, physical tumors, and geriatric diseases. Furthermore, the company officially relocated in March 2023 and had its own production base for the first time; at the same time, the laboratory at the new base is equipped with fully automated equipment, which enables automated processing of samples from collection, testing, and data analysis. The launch of the new base coincides with LDT's trial, which is expected to provide a stronger guarantee for the company's R&D, production and service capabilities.

Profit forecast, valuation and rating: We maintain the company's EPS forecast for 23-25 at 1.12/1.53/2.08 yuan, an increase of 53.60%/36.50%/36.14% over the previous year. Considering the company's leading position in the IVD integrated service industry and the differentiated advantages that self-produced products continue to highlight, we maintain the “buy” rating.

Risk warning: Product promotion falls short of expected risks, and market competition increases risks.