Incident: The company released its semi-annual report for 2023. During this period, it achieved operating income of 2.95 billion yuan, an increase of 21.6% over the previous year, and achieved net profit of 4.3 million yuan, an increase of 5.8% over the previous year. Among them, 2023Q2 achieved revenue of 1.53 billion yuan, an increase of 28.4% over the previous year, and a net profit of 200 million yuan from the previous year, an increase of 2% over the previous year.

The company's revenue continued to grow in the first half of 2023. 2023H1's stand-alone injectable and systems segment achieved revenue of 1.31 billion yuan, up 22.2% year on year; bioengineering stand-alone machines and systems achieved revenue of 500 million yuan, up 2.6% year on year; and purification equipment and engineering revenue of 230 million yuan, up 4.1% year on year. Looking at the subregion, in the first half of the year, domestic revenue was 2.37 billion yuan, up 31.5% year on year, overseas revenue was 580 million yuan, down 6.9% year on year, and overseas business revenue accounted for about 19.7%.

The gross margin fluctuated. The gross sales margin of 2023H1 was 38.9%, -3.2 pp; of these, the gross margin of the single-unit injectable and system segment was 40.4%, down 5.8 pp from the previous year; the gross margin of the single-machine and system segment of bioengineering was 37.3%, down 2.6 pp from the previous year. 2023H1's sales expenses, management expenses, and R&D expenses were 150 million yuan, 250 million yuan, and 160 million yuan respectively, accounting for 5%, 8.6%, and 5.6% of revenue, respectively, with year-on-year increases of 0.5 pp, -0.2 pp, and -0.7 pp, respectively. Net sales margin was 15.6%, down 2pp from the previous year.

Profit forecast and investment suggestions: The company's net profit for 2023-2025 is expected to be 950 million yuan, 1.14 billion yuan, and 1.45 billion yuan respectively, maintaining the “buy” rating.

Risk warning: The risk that downstream demand will fall short of expectations, that the company's R&D progress will fall short of expectations, and that the competitive landscape will deteriorate.