Incident: The company released its 2022 annual report, achieving operating income of 706 million yuan (+58.14%), net profit attributable to the mother of 270 million yuan (+46.27%), net profit of 197 million yuan (+14.46%), and the impact of non-recurring profit and loss on net profit of 78.0777 million yuan, mainly due to investment income of 51.54 million yuan from the acquisition of the company's amortized instruments. In addition, after deducting the relevant effects, the impact of share payments amortized by the company on Guimo's net profit was 62.37 million yuan. After deducting the relevant impact, the net profit of the parent was adjusted to the net profit of the parent $286 million (+44.48%).

The biomedical field continues to grow, and small molecules have made breakthroughs. In 2022, the company achieved revenue of 590 million yuan (+51.27%) in the biomedical sector, accounting for 83.63% of revenue, a slight decrease from the previous year. Among them, revenue from chromatographic media mainly used for the separation and purification of macromolecule drugs achieved a 14.50% increase; the revenue of chromatographic fillers applied to the separation and purification of small molecule drugs increased by 77.17%, and high-performance filler products for antibiotics continued to be released; process development and large-scale application of a full range of contrast agent products were completed; and a breakthrough was made in the development of high-performance insulin silicone products, which have been proven to be internationally competitive.

Customer introduction has been strengthened, and revenue from mature projects has also increased rapidly. In 2022, the number of customers of the company's chromatographic fillers and chromatography media products reached 611, an increase of 111 over the same period last year; achieved about 928 new projects, including 35 new clinical phase III projects, mainly antibody projects; 58 new commercialization projects were added, mainly small molecule drugs. In terms of mature projects, the company's sales revenue of chromatographic fillers and chromatography media products applied to pharmaceutical companies' official production or phase III clinical projects in 2022 was about 264 million yuan. Compared with the same period last year, an increase of about 11 pcts over the same period last year, we expect it to be related to the high number of mature small molecule projects imported.

Technological innovation accelerates product development, and extended mergers and acquisitions help business expansion. Relying on the advantages of microspherical material substrate preparation technology, the company continues to plan and develop new products. Key new products launched in 2022 include UniMabExe, a new proteina-affinity chromatography medium product, nanogel-50QHC, an affinity chromatography medium dedicated to mRNA separation, nanogelDT20, an affinity chromatography medium dedicated to mRNA separation, and small particle size silicone chromatographic filler products with a very large pore structure (500 A/ 1000 A/ 1250 A/ 1500 A, etc.). New business aspects: 1) Acquired Infini and collaborated to develop two novel nucleic acid extraction magnetic beads and adapt them to mainstream nucleic acid extraction kits in the market; 2) Acquire a sequograph instrument and extend the business to purified chromatography systems; 3) Introduce Dr. Yang Linglu to set up a project team to carry out research and development of functional membrane materials, and Dr. Wang Zhicheng formed a project team to develop new carbon microsphere materials and cooperate with third parties to develop medical and aesthetic microsphere products.

Profit forecast: We expect the company's net profit to be 325 million yuan, 521 million yuan, and 760 million yuan respectively in 2023-2025, and EPS of 0.81 yuan, 1.29 yuan, and 1.88 yuan respectively. The company broke the monopoly of a few foreign companies on related technology and products. At the same time, it began exporting to foreign countries with excellent product performance. The products were aimed at larger replaceable stock markets and incremental markets. We gave the company 1.2-1.5XPEG in 2023. The reason for the premium compared to comparable companies was that the company's equity amortization expenses had a great impact on the company's apparent performance in recent years. The corresponding reasonable value range was 36.32-45.40 yuan, maintaining a “superior market” rating.

Risk warning: Risk of new customer expansion falling short of expectations, risk of new product development failure or progress falling short of expectations, risk of increased market competition, and cyclical risks in stock customer procurement.