Brief comment on performance
On October 23, 2023, the company released its third quarterly report of 2023. In the first three quarters of 2023, the company realized income of 708 million yuan (+ 18.08%), net profit of 174 million yuan (- 22.50%), net profit of 154 million yuan (+ 27.09%), income of 249 million yuan (+ 20.38%), net profit of 47 million yuan (- 65.17%) and net profit of 45 million yuan (+ 0.30%) in the first three quarters of 2023. The decline in homing net profit compared with the same period last year is mainly due to the completion of technology transfer of SDC2 products by 3Q22 Company, resulting in non-operating income of about 80.39 million yuan.
Business analysis
Business indicators are healthy, R & D adhere to high investment. The company's annual gross profit margin of 3Q23 is 83.60% and its net profit is 24.55%. The company's expenses are well controlled, and the rates of sales and management expenses are on a downward trend. The year-on-year increase in 3Q23 financial expenses is mainly due to the exchange losses of US dollars and euros on foreign currency assets held by the company. In addition, the company insists on high R & D investment, and the rate of 3Q23 R & D expenditure is 21.31% (+ 1.03pct).
Reach a cooperation with AstraZeneca PLC to expand the product line on the market. On August 15, 23, the company signed a new concomitant diagnosis cooperation with AstraZeneca PLC. According to the agreement, the company's self-developed human 10 gene mutation joint detection kit (reversible terminal termination sequencing) will be based on ENHERTU? Drug development is accompanied by diagnostic use to screen patients with HER2 (ERBB2) mutation positive non-small cell lung cancer (NSCLC), and the new cooperation will lead to further product expansion. In terms of instruments, the company's 30-150G high-throughput gene sequencer ADx-SEQ200 Plus was approved in September, 23. The high-throughput instrument reduces the cost of single start-up, improves the detection efficiency, and is expected to drive the release of reagents.
The release of equity incentives demonstrates long-term confidence in development. On September 8, 23, the company announced the 2023 restricted stock incentive plan (draft). At the company level, the assessment target is that the operating income value in 2023 is not less than 1.02 billion yuan, the cumulative operating income value in 2023-2024 is not less than 2.264 billion yuan, and the cumulative operating income value in 2023-2025 is not less than 3.783 billion yuan. Based on the fact that the three-year performance meets the company-level performance assessment requirements, the company's operating income CAGR will be 22% in 2023-2025. Equity incentive promotes the construction of the company's core talent team, and the incentive goal clearly demonstrates the company's long-term development confidence.
Earnings forecast, valuation and rating
Taking into account the company's equity incentive fees and exchange situation, we have lowered our 24-and 25-year profit forecasts by 5% and 7%. It is estimated that the 23-25 year-on-year net profit of the company will be 2.33,2.84 and 347 million yuan, respectively, compared with the same period last year. EPS of-12%, + 22% and + 22% respectively are 0.58,0.71,0.87 yuan respectively, and the current price corresponds to 39,32 and 26 times of PE.
Risk hint
International macro environmental risk; new product R & D registration risk; exchange rate fluctuation risk; product promotion risk is not up to expectation.