Main points of investment
What happened: recently, Mike Biology released its 2023 semi-annual report. In the first half of 2023, the company realized operating income of 1.381 billion yuan, down 22.51% from the same period last year; realized net profit of 175 million yuan, down 56.91% from the same period last year; realized net profit of 178 million yuan, down 55.41% from the same period last year; and realized net operating cash flow of 410 million yuan, down 2.92% from the same period last year.
The decline of COVID-19 's products has led to pressure on performance and steady growth of conventional products: in the first half of 2023, the company achieved operating income of 1.381 billion yuan, down 22.51% from the same period last year. From a product point of view, the sales revenue of 2023H1's independent products was 867 million yuan, down 23.69% from the same period last year, mainly due to changes in domestic epidemic prevention and control policies, resulting in a sharp drop in demand for molecular diagnostic reagents. The corresponding sales revenue dropped to 6 million yuan from 393 million yuan in the same period last year (down 98.55% from the same period last year). Excluding the influence of molecular diagnostic reagents, the revenue of the company's conventional independent products reached 861 million yuan, an increase of 15.99% over the same period last year. In addition, the company provides for impairment of inventory related to molecular diagnostic products, and increases the provision for inventory decline by 49.42 million yuan in the current period, which has a certain impact on the profit end.
The company vigorously promotes the assembly line to coordinate the installation of individual machines on various platforms, and the release of reagents is expected in the future: with the gradual recovery of routine testing business in the terminal market, 1601 large-scale instruments of 2023H1's independent products have been released from the market, including 169birth immunity and blood production lines. The instruments put into the terminal market will bring continuous growth in reagent sales one after another. During the reporting period, the sales income of conventional reagents of the company's independent products was 805 million yuan, an increase of 12.9% over the same period last year.
Profit forecast and valuation: the company is a leading enterprise in the field of in vitro diagnosis. it continues to expand its product line through independent research and development, agents and mergers and acquisitions, and its independent products cover biochemistry, immunity, temporary testing, molecules, etc., under medium-and long-term product planning and orderly deployment, various product platforms will continue to push through the old and bring forth the new, and independent products have become the driving force for the company's long-term sustainable development. We have adjusted our profit forecast for the company and expect the company's EPS from 2023 to 2025 to be 0.80,1.10,1.39 yuan respectively, corresponding to the stock price PE of 18.5,13.5,10.7 times on August 15, 2023, maintaining the "overweight" rating.
Risk hints: industry competition aggravates risks, policy risks such as collection of in vitro diagnostic reagents, and the speed of new product research and development is not as fast as expected.