The company released its semi-annual report for 2023: during the reporting period, the company achieved operating income of 4.521 billion yuan, a year-on-year decrease of 5.0%; realized net profit of 175 million yuan, an increase of 9.7% over the previous year; achieved net profit of 157 million yuan, an increase of 6.4% over the previous year.
The company's profit for the first half of the year was basically in line with market expectations. The decline in revenue in the first half of the year was mainly affected by nucleic acid testing factors in the same period last year (the scale of third-party laboratory testing business was high last year, and the scale declined during the same period this year).
The gross margin increased, and the cost ratio increased slightly: according to the company's 2023 semi-annual report, the company's gross margin for the first half of the year was 27.00% (25.18% for the same period last year); the sales expense ratio was 10.01% (9.00% for the same period last year); the management expense ratio was 4.86% (4.26% for the same period last year); and the R&D expense ratio was 1.46% (1.24% for the same period last year). In the first half of the year, the company took the initiative to divest low margin and long account period businesses, and gross margin increased markedly as a result.
The company has clearly recovered after the epidemic. According to the company's 2023 semi-annual report: (1) By business type, the company's intensive business/regional inspection center business achieved revenue of 1,237 million yuan, an increase of 3.46% over the same period last year; the industrial sector achieved revenue of 289 million yuan, an increase of 36.63% over the same period last year; the third-party laboratory business achieved revenue of 74.66 million yuan, down 87.72% from last year; traditional supply chain service revenue was 3.143 billion yuan, up 8.26% year on year; (2) Looking at the subregion, revenue growth rates in East China, Northeast China, North China, Southwest China, and Central China were respectively -15%, 4%, 15%, and 12%. East China was affected by last year's nucleic acid tests, while other regions basically showed obvious post-epidemic recovery. Sinopharm Runda, a joint venture of the company, achieved revenue of 2.24 billion yuan in the first half of the year, an increase of 21% over the previous year, and a net profit of 93.22 million yuan, an increase of 19% over the previous year.
Maintaining the “buy” rating: Considering the significant decline in the company's ICL business since this year, we have slightly lowered the company's profit forecast for 2023-2025. The estimated net profit for attributable income is 504 million yuan, 620 million yuan, and 753 million yuan respectively (the previous forecast was 524 million yuan, 649 million yuan, and 805 million yuan), with corresponding price-earnings ratios of 17 times, 14 times, and 11 times, respectively. We continue to be optimistic about the scarcity and large 2B and 2C prospects of the AI medical model that the company collaborates with Huawei, and maintains the company's “buy” rating.
Risk warning: increased market competition, mining risk, R&D risk