Matters:
The company released its 2022 annual report and 2023 quarterly report on the evening of April 25. It achieved revenue of 378 million yuan in 2022, an increase of 31.4%; net profit of the mother was 92 million yuan, an increase of 3.3% over the same period. Q4 alone achieved revenue of 112 million yuan, an increase of 24.84% over the previous year, and net profit of the mother was 27 million yuan, a decrease of 10.16% over the previous year. In Q1 2023, revenue was 87 million yuan, down 5.9% from the same period, and net profit of the mother was 17 million yuan, down 44.4% from the same period.
Commentary:
The four major businesses have been stable and positive for a long time, and life science reagents have grown rapidly. The company's revenue side maintained steady growth in 2022, mainly because the company continued to expand the variety of products, and at the same time accelerated sales order response and improved order delivery efficiency through the construction of new and optimized external warehouses. By business, the company achieved revenue of 183 million yuan for high-end chemical reagents, an increase of 23% over the previous year, revenue from life science reagents was 108 million yuan, an increase of 61% over the previous year, revenue from analytical chromatography reagents was 48.66 million yuan, an increase of 27% over the previous year, and revenue from materials science reagents was 24.6 million yuan, an increase of 20% over the previous year.
New product development is accelerating, and inventory turnover is good. The inventory value reached 375 million yuan in '22, an increase of 107% over the previous year. The number of inventory turnover days was 33 days. We think the main reasons are as follows: 1) The East China Warehouse, the South China Warehouse, the North China Warehouse, and the Southwest China Warehouse were put into use and preparation, and the inventory volume of traditional products increased. 2) The development speed of the company's product range has accelerated markedly. The increase in new categories has led to an increase in inventory. Among them, the number of life science business inventories has increased by 135%.
3) The establishment of warehouses on the west coast of the United States has basically been completed, and overseas sales have begun. It is expected to be put into use this year. As product categories and inventories continue to increase, demand for the recovery of the epidemic rises, and opportunities to develop overseas markets, the company's performance is expected to continue to improve in the future.
Expenses associated with the year of expansion increased, and 23Q1 performance was under pressure. The company added 109 new employees in 2022, with a management expense ratio of 13.9%, a year-on-year decrease of 0.8pct; the sales expense ratio was 8.4%, an increase of 1.5pct over the previous year; the financial expense ratio was -0.9%, an increase of 1.0pct over the previous year; the R&D expense ratio was 10.3%, an increase of 2.4pct over the previous year.
Costs related to personnel growth, depreciation of newly purchased equipment, etc. have increased markedly, and increased investment in R&D costs affects gross margin and net interest rate levels. The company's gross margin in 2022 was 58.7%, down 3.6pct from the previous year, and the net interest rate was 24.4%, down 6.6pct from the previous year. The 2023Q1 company's revenue and profit sides are under pressure, mainly affected by the January pandemic. It is expected that starting in the second quarter, as revenue returns to normal growth, the cost rate will decline somewhat, and the overall profit quality will gradually improve.
Investment advice: The target price for 2023 is 38.4 yuan to maintain the “push” rating. Due to pressure on 23Q1 performance, 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 136 million yuan (the original value was 157 million yuan), 181 million yuan (the original value was 204 million yuan), and 226 million yuan respectively, corresponding to PE 34/26/21 times. Considering the company's perfect warehouse construction and online shopping mall sales advantages, referring to the valuation of comparable companies in the same industry, the company was given 40 times PE in 2023, corresponding to the target price of 38.4 yuan, maintaining a “strong push” rating.
Risk warning: domestic substitution falls short of expectations; industry competition intensifies; product development falls short of expectations; warehousing and logistics safety risks; overseas market development falls short of expectations