Matters:
The company released its 2023 three-quarter report. In the first three quarters, the company's revenue was 2,004 billion yuan (-57.32%), net profit was 400 million yuan (-67.75%), net profit was 400 million yuan (-67.75%), and non-net profit was 337 million yuan (-71.38%). In the third quarter alone, the company's revenue was 516 million yuan (-22.18%), net profit was 65 million yuan (+5.38%), and net profit after deducting non-net profit was 42 million yuan (-0.31%).
Commentary:
Domestic division: Dengue testing products contributed to revenue growth. 2023Q3, the installed capacity of the company's domestic tubular luminescence business is mainly a 200-speed i2900. Affected by the general environment, the installation speed is relatively slow. However, due to the influence of neighboring countries and regions and the increase in personnel mobility, sales of the company's dengue testing products increased in 2023Q3, and the domestic colloidal gold business achieved rapid growth. Overall, in a situation where the external environment fluctuated, 2023Q3 provided business support to key customers through active countermeasures, and achieved a steady increase in revenue. Looking forward to the future, the company plans to transition from a single characteristic project in the past to a combination of special projects, and use the special project portfolio to leverage the share of some of the four major categories of conventional projects. Furthermore, from the perspective of instrument layout, the layout of the company's chemiluminescence business will be richer in 2024, which is also more conducive to coverage to higher-level hospitals.
International Business Division: The three major technology platforms are expanding at an accelerated pace. According to the technical platform, the company's international department's business can be divided into three main lines: colloidal gold, fluorescence, and new platforms. Judging from the colloidal gold platform, 2023Q1-3 companies' orders for infectious diseases at the developing country level have clearly recovered, while the pregnancy business has maintained steady growth. Furthermore, the company's strepA (strepA A) testing products have brought significant increases in the European market. Judging from the fluorescence platform, 2023Q1-3's fluorescence business has achieved rapid growth in markets covered by the International Department. Judging from the new platform, the company is actively introducing chemiluminescence business and has obtained registration certificates in nearly 20 countries. The sales situation of blood gas and blood coagulation products on the electrochemical platform is relatively stable.
US subsidiary: The drug testing business benefits from deep ties with major customers. US subsidiaries still focus on drug testing business, benefiting from brand accumulation in the US drug testing market over the years. 2023Q1-3, the revenue of US subsidiaries has maintained steady growth at the level of major customers. Looking ahead, in 2024, the company plans to consider introducing some infectious disease businesses on the colloidal gold platform into the US market (such as respiratory infectious diseases). Currently, the company is actively arranging registration work. In addition, the US market has a relatively wide range of primary medical institutions (such as primary doctor clinics), and they need to use fluorescent platform instruments and reagents. Therefore, next, the company plans to introduce some fluorescence platforms into the US market to maintain steady growth in the US market.
Investment suggestions: Due to phased pressure on the installation speed of the company's chemical luminescence business, we expect the company's net profit in 23-25 to be 5.1, 6.4, and 8.0 billion yuan (the original forecast values for 23, 24, and 25 were 6.1, 7.6, and 960 million yuan), with year-on-year growth rates of -57.5%, +25.4%, +24.7%, EPS of 1.14, 1.43, and 1.79 yuan respectively, corresponding PE of 23, 18 and 15 times. According to DCF model estimates, the company was given an overall valuation of 16.6 billion yuan, corresponding to the target price of about 37 yuan, maintaining the “recommended” rating.
Risk warning: 1. Overseas revenue volume falls short of expectations; 2. New technology platforms such as chemiluminescence fall short of expectations.