Incidents:
The company released the first quarter report of 2023. It achieved revenue of 30.79 million yuan in the first quarter, a decrease of 57.89% over the previous year, net profit of 31.74 million yuan, a decrease of 363.00% over the previous year, and net profit of the mother after deduction of -32.97 million yuan, a decrease of 403.08% over the previous year. The company's net profit in Q1 was negative, mainly because of a phased decline in revenue from the gene therapy CDMO business, while fixed costs, such as a large reserve of personnel that were about to be put into operation in port, were relatively high. At the same time, due to the increase in the company's operating scale matched the increase in operating personnel, and the increase in expenses during various periods such as market expansion and R&D investment.
CRO business achieves steady growth
As the cornerstone of the company's continuous development in the CGT field, the CRO business segment achieved revenue of 13.71 million yuan in 2023Q1, +24.21% over the same period last year. Compared to the 12.79% year-on-year growth rate in 2022, the company's CRO business in 2023 has escaped the adverse effects of the previous COVID-19 pandemic and has resumed rapid growth.
Short-term demand for the CDMO business declined, the gradual release of production capacity at the port base in Q3 was affected by the ongoing external economic downturn. The overall financing pressure for downstream innovative drug development increased. The progress of pharmaceutical companies' R&D pipelines was cautious. Financing for some CGT pharmaceutical company customers was delayed, and their project orders were suspended or postponed to varying degrees. The company achieved revenue of 15.5 million yuan in 2023Q1, a decrease of 74.56% over the previous year. Despite this, the company's overall CDMO business has maintained a healthy growth trend. Q1 has helped customers obtain 6 new IND approvals, 16 new customers, and more than 50 million yuan in new orders. As the Q3 port industrial base is gradually put into operation, the growth rate of project orders and revenue is expected to recover rapidly.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue in 2023-2025 to be 375/594/880 million yuan respectively (the original value in 23-24 was 636/832 million yuan), and the corresponding growth rate was 28.78%/58.34%/48.12%, respectively; Guimu's net profit was 0.45/0.83/141 million yuan (the original value in 23-24 was 157/228 million yuan), and the three-year CAGR is 77.01%, corresponding to the current PE of 185/99/59X, respectively. Since downstream demand for CGT has begun to gradually recover after experiencing a short decline, and the company is the leader in the domestic CGT CDMO industry, it has given PEG of about 1.3, corresponding to 120 times PE in 2024. The company's reasonable market value is 10 billion yuan, and the corresponding target price is 20.20 yuan, maintaining the “increase in holdings” rating.
Risk warning: technology upgrades and iterations; stricter industry regulatory policies; price increases for upstream raw materials and equipment; increased competition in the domestic market; and the COVID-19 pandemic has led to production stoppages.