Event: the company released its three-quarter report for 2023, with steady revenue growth. In the first three quarters of 2023, the company achieved a total revenue of 708 million yuan, an increase of 18.08% over the same period last year, a net profit of 174 million yuan, a decrease of 22.50%, and a non-return net profit of 154 million yuan, an increase of 27.09% over the same period last year.
Comments:
The interference of the epidemic gradually subsided, and the revenue achieved steady growth: Q3 realized revenue of 249 million yuan in 2023, an increase of 20.38% over the same period last year; the net profit of parent was 47 million yuan, down 65.17% from the same period last year, mainly due to the technology transfer of SDC2 products completed by Q3 company in 2022, resulting in a non-operating income of about 80.39 million yuan, and due to the decrease in financial income due to the current period and the increase in losses of associated enterprises. The non-homed net profit was 45 million yuan, an increase of 0.30% over the same period last year, which was basically the same as that in the same period last year, mainly due to exchange rate changes, the company's foreign currency assets exchange losses of US dollars and euros led to a large increase in financial expenses, while increasing investment in research and development. In the first three quarters of 2023, the company's sales gross profit margin increased by 0.36pp to 83.60% compared with the same period last year; the sales expense rate decreased by 3.29pp to 31.51% year-on-year; the management expense rate and R & D expense rate increased by 0.20pp to 28.77% year-on-year; the financial expense rate increased by 1.87pp to-3.18% year-on-year; and the period expense rate decreased by 1.21pp to 57.09% year-on-year.
Increase investment in R & D and enable product innovation: in the first three quarters of 2023, R & D investment was 151 million yuan, an increase of 24.07% over the same period last year, accounting for 21.31% of revenue. In the third quarter, we obtained the registration certificate of medical devices such as gene sequencer, PD-L1 antibody reagent and seven mutation detection kits of human KRAS gene; obtained two invention patents issued by China's State intellectual property Office; and obtained the US invention patent certificate for "a probe and its method for enriching the target area suitable for high-throughput sequencing".
Work with AstraZeneca PLC to deepen the cooperation again: following the cooperation of HRD testing products reached with AstraZeneca PLC on July 24, 2023, the company announced again on August 15 that it would cooperate with AstraZeneca PLC to develop HER2 concomitant diagnostic products for lung cancer in China. Adelson's self-developed human 10 gene mutation joint detection kit (reversible terminal termination sequencing) will be based on ENHERTU drugs to develop concomitant diagnostic uses to screen patients with HER2 (ERBB2) mutation positive non-small cell lung cancer (NSCLC). Earlier, the two companies were working on cooperation in the areas of prostate, breast and ovarian cancer, and the signing of the new agreement further expanded the scope of cooperation between the two sides.
Profit forecast, valuation and rating: considering that the company benefited from the post-epidemic recovery in the first three quarters and the business recovered quickly, we maintained the company's 23-25 net profit forecast of RMB 2.58 trillion, and the current price corresponding to the 23-25 year PE is twice that of 35-28-23. Considering that the company is a leading enterprise in the domestic tumor diagnosis industry, with technical barriers and product advantages, we are optimistic about the company's long-term development. Continue to maintain a "buy" rating.
Risk hint: product research and development and approval are less than expected risk, market competition aggravates risk.