Events: Nanowei Technology released its three-quarter report for 2023. Operating income for the first three quarters was 451 million yuan, a year-on-year decrease of 4.05% (excluding the impact of base-period nucleic acid detection beads, a year-on-year increase of 8.55%); net profit of 39 million yuan, a year-on-year decrease of 81.61% (excluding the impact of equity payment amortization and base-period acquisition of Cypex's investment income, net profit of 134 million yuan (-28.55%); net income for the third quarter was $0.21 million, down 85.47% year on year; revenue for the third quarter was $6.15 billion, down 11.54% year on year 。
The company simultaneously released a new product UniSil Revo series monodisperse silicone chromatographic filler:
In the purification of GLP-1 and insulin-like drug raw materials, reverse silicone chromatographic fillers are mainly used in the purification step. High resolution and purification yield of silicone fillers are required, and at the same time, the load must also be guaranteed to shorten the purification cycle and cost.
The growth rate of the main chromatographic filler industry has increased, and the gross margin has remained stable.
In the first three quarters, the company's core business, chromatographic fillers and chromatography media products, achieved revenue of 321 million yuan, up 9.12% year on year, up 9.12% year on year, up from 5.45% in the first half of the year. We believe this is the result of the company's downstream customers' production and operation continuing to recover from the pandemic, thus further showing a funnel effect on demand for raw materials, and the company's active adjustment of marketing strategies and continuous expansion of product categories in response to external environmental challenges. According to the Company's Investor Relations Activity Record Form (20231026-20231027) (hereinafter referred to as “Investor Relations Activity Record”), the company's filler business currently accounts for about 10% and less than 1% of the market share in the domestic and global markets respectively, and the company's long-term logic of leading domestic substitution in the chromatographic filler market has not changed. The company's gross margin for the first three quarters was 79.00%, which is basically the same as 79.06% in the first half of the year. According to records of investor relations activities, the gross margin of the company's filler products remained basically stable year-on-year in the first three quarters, reflecting that the performance of the company's chromatographic fillers is generally superior among similar domestic products, maintaining good product pricing power. The company's R&D expenditure rate for the first three quarters was 28.57%, an increase of 12.9 pct over the previous year. R&D investment is ahead, reflecting the company's enthusiasm for advanced technology despite short-term adjustments in downstream demand, and is expected to continue to grasp new downstream demand.
Launch new products to enhance the overall separation and purification process service capabilities of GLP-1 drugs.
According to records of investor relations activities, the company's ion exchange chromatography media, polymer reverse chromatography fillers and other products have been introduced into various R&D and production projects for GLP-1 polypeptide drugs. On the basis of customer resources, the company's overall separation and purification process service capabilities for GLP-1 drugs have been greatly improved after the release of the reverse silicone filler UniSil Revo.
UniSil Revo series silicone fillers can be used to purify fermented and fully synthetic GLP-1. Compared with nano-micro silicone fillers, UniSil Revo series products have been further improved in terms of resolution and alkali resistance. Using UniSil Revo and similar products from imported brands to purify somalopeptide and recombinant human insulin, the data shows that the purity and yield obtained by applying UniSil Revo is comparable to imported brands.
Profit forecast and investment rating: The company is a leading enterprise in the domestic chromatographic filler industry. Relying on the innovative advantages of nano-microsphere substrate preparation technology, the company has accumulated a complete product line, large-scale production capacity and professional and efficient application technology service capabilities. It is expected to achieve steady growth under the booming development of the downstream biopharmaceutical industry and the trend of domestic substitution. We expect the company's net profit from 2023-2025 to be 0.6/122/190 million yuan, respectively. Maintain a “buy” rating.
Risk warning: Customer growth falls short of expectations, order volume falls short of expectations, new product development falls short of expectations, and price drops exceed expectations.