Incident summary

In 2022, the company's operating income was 706 million yuan (YOY +58.14%), net profit of 275 million yuan (YOY +46.27%), net profit of the non-return mother was 197 million yuan (YOY +14.46%), adjusted investment income from the acquisition of Saipeku Instruments was 51.54 million yuan, and share payment expenses of 62.37 million yuan, adjusted net profit of 286 million yuan (YOY +44.48%). 1Q23 achieved operating income of 132 million yuan (yoy -6.21%), net profit of 12.36 million yuan (yoy -79.71%), net profit of 5.99 million yuan (yoy -89.35%), adjusted share payment expenses of 32.95 million yuan, and adjusted net profit of 45.31 million yuan (yoy -25.68%).

Key points of investment

Sales revenue rebounded month by month, and share payments affected short-term profits

1Q23 was affected by adverse external factors. Revenue from January to March was 1.6, 4.4, and 720 million yuan respectively, and revenue recovered significantly month by month; gross profit margin was 80.46% (yoy-3.27pp), net profit margin 6.69% (yoy-37.21pp). The decline in net profit margin was mainly due to the increase in equity incentive expenses and the decline in scale of revenue. The sales expense ratio was 17.51% (yoy+3.99pp), management expenses ratio 25.62% (yoy+14.48pp), The R&D cost rate is 28.83% (yoy+17.42pp). The net interest rate in 2022 was 39.22% (yoy-2.75pp), and the gross profit margin was 78.62% (yoy-5.27pp), mainly due to the low gross margin level of the acquired Spectrum instrument, increased stock incentive costs and employee remuneration, and increased investment in R&D.

The share of back-end business increased rapidly, and the product application field continued to expand the company's biomedical sector to achieve revenue of 590 million yuan (yoy +51.27%) in 2022, accounting for 83.63%, of which revenue from chromatographic fillers and chromatography media was 452 million yuan (YOY +29.58%), accounting for 64.02%. Split by application area, macromolecule drugs achieved revenue of 308 million yuan (YOY +14.50%); the application of fillers such as small-molecule drugs such as antibiotics, contrast agents, and insulin continued to be released, achieving revenue of 127 million yuan (YOY +77.17%). Divided by the number of projects, the company had 928 application projects in 2022, accounting for 41.52% of the total number of cumulative application projects. Judging from the project stage, there were 35 three-phase projects, 58 commercialized projects. The revenue share of phase III and commercialized projects exceeded 58.41%, an increase of 11 pp over the previous year.

Gradually building a business integration model, R&D iteration and production capacity building to promote long-term growth. The company successively acquired SISPETRA, RILAS, and Infini in 2022. The acquisition of RILAS helped accelerate the penetration of the company's products into the North American market; the acquisition of Sispektronix lays out purified chromatography systems and integrates customer/channel resources from both parties, and the business integration model is beginning to show advantages. In terms of infrastructure, the company's Changshu 40 tons/year agarose microsphere and 10 tons/year glucan microsphere transformation project is already in trial production. The R&D center building is scheduled to be put into operation in early 2024, and it is planned to build a new “bio-chromatography medium with an annual output of 600 tons and a 2-ton chiral drug separation and purification project” in Jiaxing, Zhejiang. The affinity chromatography medium UniMab EXE developed independently by the company, the ion exchange chromatography medium NanoGEL-50Q HC, and the affinity chromatography medium NanoGeLDT20 dedicated to mRNA separation are gradually being introduced to the market.

Profit forecasting

Considering the decline on the demand side brought about by the decline in global investment and financing data, while the company increased R&D investment and talent reserves, we adjusted the company's 2023-2025 operating income to 992/1326/1,762 million yuan (originally 2023-2024 was 1,019/1,434 million yuan); the return mother's net profit was 304/3.50/474 million (originally 2023-2024 was 440/631 million yuan); the corresponding EPS was 0.75/0.87/1.18 yuan/share (originally 2023-2024 was 440/631 million yuan); the corresponding EPS was 0.75/0.87/1.18 yuan/share (originally 2023-2024) 2023-2024 is 1.10/1.58 yuan/share), maintaining the “increase in holdings” rating.

Risk warning: risk of new product launch falling short of expectations; risk of customer expansion falling short of expectations; risk of purchasing some raw materials from a single supplier; risk of changes in pharmaceutical policies; risk of product quality control.