Matters:
The company released its 2022 annual report and the first quarter report of 2023. The company achieved revenue of 355 million yuan in '22. The year-on-year decrease was 3.76%; the net profit of the mother was 45 million yuan, a year-on-year decrease of 35.71%. In Q23, the company achieved revenue of 97 million yuan. The year-on-year increase was 24.68%, and the net profit of the mother was 013 million yuan, an increase of 7.99% over the previous year.
Commentary:
Q1 performance picked up after the pandemic ended, and the market for new products is expected to open up. 1) Revenue side: In '22, the company's performance was put under pressure due to frequent outbreaks of domestic epidemics. Annual revenue was 355 million yuan, a decrease of 3.76%. The Q1-Q4 revenue growth rate was -2.60%/-23.95%/7.94%/5.90%, respectively; Guimu's net profit was 45 million yuan, down 35.71% from the same period. With the optimization of epidemic prevention and control policies and the promotion of new products and the expansion of new industries, Q1 revenue increased significantly in '23. 2) In terms of profitability: Affected by rising raw material costs in '22, the comprehensive gross margin of all products was 47.71%, a year-on-year decrease of 1.51%; during the period, fees totaled 120 million yuan, an increase of 12.46%, mainly due to an increase in sales and R&D personnel and a higher increase in remuneration.
Domestic brands replace imports, and high-end products replace low-end products. There was little change in the total revenue of the three types of ordinary microwave digestion (domestic/imported) and super microwave digestion products, but the structural share of the three categories of products changed a lot.
1) Domestic production/import perspective: Labtech brand revenue among ordinary microwave digesters increased 34.93% year on year, imported Milestone brands fell 24.67% year on year, and domestic substitution trend was obvious. 2) High-end/low-end perspective: In the customer purchasing trend, more and more customers are choosing expensive but powerful super microwave digestion systems, and the proportion of high-end products increased 3.56% over the same period last year. The company's strong domestic replacement capability has been demonstrated, and it can continue to consolidate its leading position in domestic laboratory analytical instruments in the future.
The product development pipeline has been broadened at an accelerated pace, and the analytical instrument product matrix has been gradually improved. The products currently under development include ICP-Q-TOF-MS, ICP spectroscopy and GC-MS. Among them, ICP-Q-TOF-MS has completed its functionality and is expected to complete project acceptance by the end of 23 and officially launched on the market in 24. ICP Spectroscopy and GC-MS teams are being formed. R&D investment in 2022/23Q1 was 38 million yuan/10 million yuan respectively, an increase of 22.37%/13.61% over the previous year, accounting for 10.82%/10.35% of operating income respectively. By the end of 22, the R&D/sales team had increased by 19 people/18 people to 120 persons/146 people respectively.
Investment advice: The target price for 2023 is 49 yuan to maintain the “push” rating. Since 2022 was greatly influenced by macro factors, we lowered our profit forecasts for 2023 and 2024 and added a profit forecast for 2025. We expect the 2023-2025 company's net profit to be 66 million yuan (the original value was 92 million yuan), 89 million yuan (the original value was 109 million yuan), and 105 million yuan respectively, corresponding to PE 44/33/28 times. Considering the imminent release of the company's ICP mass spectrometry, referring to the valuations of comparable companies in the same industry, the company was given 50 times PE in 2023, corresponding to the target price of 49 yuan, maintaining the “strong push” rating.
Risk warning: domestic substitution falls short of expectations; industry competition intensifies; business expansion falls short of expectations; mass spectrometer product sales fall short of expectations.