Event description

According to the company's quarterly report for the first three quarters of 2023, the company realized operating income of 137 million yuan in the first three quarters of 2023, down 36.38% from the same period last year; realized net profit of-71.0996 million yuan, down 309.65% from the same period last year; realized deduction of non-homed net profit of-78.5616 million yuan, down 373.71% from the same period last year; basic earnings per share was-0.11 yuan, down 294.74% from the same period last year.

Event comment

The company's performance in the first three quarters of 2023 was significantly lower than that in the same period last year. Q3 compared with Q2, revenue stabilized but net profit still faced greater pressure. The company's revenue and net profit declined significantly in the first three quarters of 2023 compared with the same period last year, mainly because the external economic market environment of ① continued to be weak, and the financing progress of downstream customers of CDMO was still weaker than expected, which affected the company in terms of market business development and project delivery. ② continues to increase R & D investment, while putting a large reserve of personnel into operation for the port-adjacent industrial base, resulting in an increase in operating costs and a decline in operating margin and net profit. 2023Q3 achieved an operating income of 53.2433 million yuan, a decrease of 33.80% over the same period last year, an increase of 0.54% over the previous year, and a net profit of-26.3017 million yuan, which was enlarged compared with the loss of-13.0546 million yuan of Q2.

In the first three quarters of 2023, the company's CRO business grew steadily, and CDMO business declined significantly. It is expected that the release of production capacity of the port base will lead the CDMO business to recover gradually. In the first three quarters of ①, the company's CRO business continued its semi-annual report, with sales revenue of 53.0013 million yuan, an increase of 22.56 percent over the same period last year. In the first three quarters of ②, the company's CDMO business continued to decline due to external factors such as the sustained economic downturn and the weaker-than-expected progress of customer investment, with sales revenue of 73.3917 million yuan, down 55.81 percent from the same period last year. With the commissioning of the port base and the release of production capacity, the expansion of domestic and foreign markets has been strengthened, the company's newly signed orders have increased, and the company's ability to meet the needs of domestic and foreign gene cell therapy CDMO has also been significantly improved.

Investment suggestion

It is estimated that the company's revenue from 2023 to 2025 will be 3.03,4.05 and 531 million yuan respectively (the original value is 3.85,5.24 and 700 million yuan), an increase of 4.2%, 33.6% and 30.9% over the same period last year. The net profit is-0.52,0.05 and 48 million yuan (the original value is 0.46,0.51 and 62 million yuan) respectively, and the year-on-year change is-234.1%, 108.9% and 919.5%, respectively. The corresponding EPS is-0.08,0.01,0.07 yuan (the original value is 0.07,0.08,0.10 yuan). Calculated with the closing price of 9.16 yuan on October 27, the corresponding PE is-113.3X, 1270.6X, 124.6X respectively. Considering that the pace of new capacity release near Hong Kong is closely related to the pace of new order acquisition, and even if the industry picks up significantly, it will take some time from order acquisition to revenue recognition, so the rating is adjusted to "overweight-B".

Risk hint

There are uncertain factors in the development of gene therapy industry; the risk that the commercialization of new drug research and development of customers is not as expected; the risk of slowing down the growth trend of gene therapy CDMO business; the risk of uncertainty in the future expansion of CDMO business; the risk of short-term capacity shortage.