Events:
Northag released its semi-annual report of 2023 on August 30: revenue in the first half of 2023 was 362 million yuan, up 11.02% from the same period last year; net profit from home was 86 million yuan, up 40.23% from the same period last year; and net profit from non-return was 70 million yuan, up 21.88% from the same period last year.
Main points of investment:
The performance increased steadily, and the gross profit margin of the main business increased significantly. The company's performance increased steadily in the first half of 2023. According to the business segment: 1) the revenue of clinical trial operation service CO was 181 million yuan, up 7.55% over the same period last year; 2) the revenue of clinical trial site management service SMO was 88 million yuan, up 17.46% over the same period last year; 3) the revenue of data management and statistical analysis service DM/ST was 36 million yuan, up 3.16% over the same period last year. 4) the revenue of biological sample testing service BA is 24 million yuan, up 24.40% over the same period last year. 5) the revenue of clinical trial consulting service is 18 million yuan, up 28.60% over the same period last year. 6) the revenue of clinical pharmacology service CP is 15 million yuan, an increase of 2.28% over the same period last year.
Among them, the gross profit margin of CO services is 38.81%, an increase of 1.55pct. The gross profit margin of SMO business services is 29.62%, which is higher than that of 7.44pct.
Under the challenge of industry market demand, the company has plenty of new orders. In the first half of 2023, under the new challenges faced by the industry and market demand, the company actively expanded its business and realized a new contract amount of 649 million yuan, an increase of 69.78% over the same period last year. The new contracts mainly come from pharmaceutical companies and biotechnology companies in China.
Profit forecast and investment rating: we expect the company's revenue from 2023 to 2025 to be 810 million yuan, 1.029 billion yuan and 1.297 billion yuan respectively, an increase of 27%, 27% and 26% respectively over the same period last year; and net profit of 173 million yuan, 212 million yuan and 279 million yuan respectively, an increase of 52%, 23% and 31% over the same period last year, corresponding to a valuation of 35 times, 28 times and 22 times for PE. The company has abundant newly signed orders and rich project reserves, and its performance is expected to continue to grow high, covering it for the first time and giving it a "buy" rating.
Risk hints: market competition aggravates risk, risk of failure in drug research and development, risk of loss of core technology backbone, risk of uncertain investment and financing in the primary market, policy risk, etc.