Incidents:
Hexin Instruments recently released its report for the third quarter of 2023: the company achieved revenue of 250 million yuan (+65.3%) in the first three quarters of 2023, and revenue of 91.667 million yuan (+120.86%) in the 2023Q3 quarter alone, mainly due to: 1. The bidding process in the field of environmental monitoring was carried out normally during the reporting period. New projects signed in the first half of 2023, normal execution projects signed in 2022, and deferred execution and acceptance projects signed in 2022 were all gradually implemented, inspected and confirmed revenue during the reporting period, and revenue increased year-on-year; 2. The company's business expanded smoothly in new fields such as medicine and laboratories, and revenue from new business areas increased year-on-year. The net profit loss for the first three quarters of 2023 was 54.998 million yuan, net profit loss after deduction of 66.507 million yuan; net profit loss for the 2023Q3 quarter alone was 206.83 million yuan; net profit loss after deducting non-return net profit for the 2023Q3 quarter alone was 25.667 million yuan. The loss of 2023Q3 operating profit narrowed markedly.
Maintaining a high level of investment in R&D, the autonomy and control of core key technologies helps domestic replacement companies continue to invest intensively in R&D. The R&D investment in the first three quarters of 2023 is 53.957 million (+2.8%).
The company attaches great importance to the autonomy and control of core key components, and has independently developed key core components including electrospray ion sources, electron bombardment ion sources, vacuum ultraviolet single photons, ion detectors, and time-of-flight quality analyzers. In terms of high-end general components (high-end lasers, molecular pumps, gas chromatography mass spectrometers), the company continues to conduct joint technical research with relevant universities and scientific research institutions in China, gradually realizing the autonomy and localization of high-end general parts research and development and production, and basically achieving autonomy and control of core key technologies.
In terms of products, in 2022, the company released a triple quadrupole liquid quality combiner that meets the application needs of most users in the market. The triple quadrupole made in China has achieved the three stages of technological innovation, breakthrough in core components, and industrialization of the whole machine, and can be widely used in clinical diagnosis, food safety, public security safety, environmental testing, education and research. The quadrupole time-of-flight liquid-quality instrument (LC-QTOF 7000) released by the company in May 2023 has successfully completed the development and verification of a number of core technologies, and achieved domestic replacement of a number of key components.
Investment advice and profit forecasting
The company signed 160 million new orders in the first half of 2023, business continued to recover, continuous breakthroughs in the field of high-end mass spectrometry technology, continuous introduction of new products, vigorous development of clinical mass spectrometry and laboratory instruments, combined with broad import substitution space. The company is expected to have revenue of 4.0/555/7.1 billion in 2023-2025, with growth rates of 43.6%/35.9%/29.3% respectively; due to large R&D investment in the mass spectrometry field and new product technology promotion requirements, net profit was reduced to -64.5/-31.0/-5.4 million yuan; EPS is -0.9/-0.4/-0.1 yuan/share, corresponding PE is -36.9/-76.6/-444.0. Maintain a “buy” rating.
Risk warning
The expansion of new fields such as clinical mass spectrometry falls short of anticipated risks, new technology research and development risks, industry policy risks, etc.