Event: The company released the results announcement for the first three quarters of 2023. From January to September 2023, the company achieved operating income of 300 million yuan, an increase of 20.45% over the previous year; realized net profit of 27 million yuan, a year-on-year decrease of 22.77%; net profit after deducting net profit of 225 million yuan, a year-on-year decrease of 23.46%. The third quarter alone achieved operating income of 104 million yuan, an increase of 10.88% over the previous year, net profit of 3.834 million yuan, a year-on-year decrease of 69.16%, and net profit of 3,524,400 yuan after deducting non-return to the mother, a year-on-year decrease of 70.76%.
Market demand fell short of expectations, and depreciation and amortization expenses for the commissioning of the new base increased, and the company's overall gross margin declined. 23 The overall gross margin of the company's products in the first three quarters was 44.57%, -4.38pct year-on-year and -1pct month-on-month. The main reasons were that overall market demand fell short of expectations, increased competition, and increased depreciation and property-related expenses after investing in new production sites. On the cost side, the company's sales/management/R&D/financial expenses for the first three quarters were 17.6%/7.4%/12.3%/-0.9% respectively, compared to +0.73/0.04/1.46/-0.15pct. The increase in sales expenses was mainly due to the increase in marketing and marketing expenses for new products.
R&D investment continues to increase, high-end R&D personnel are introduced, and R&D capabilities are further strengthened. 23 In the first three quarters, the company's R&D investment increased by 36.7% year on year, and the R&D expense rate was 12.3%, up 1.5 pct year on year. In the third quarter alone, R&D investment increased 53.22% year on year, mainly because the company added key R&D projects and introduced high-end R&D personnel. The company's newly introduced R&D personnel have experience in design, development and marketing for leading international instrument companies, and will later be responsible for the company's mass spectrometry product development and production. As R&D investment continues to increase and the R&D team becomes stronger, the company's mass spectrometer series products are expected to develop rapidly.
The company and the Chinese Academy of Metrology have launched important cooperation projects to promote research and development of key metrology technologies and achievements.
In September 2023, the company and the China Institute of Metrology initiated in-depth cooperation in the field of environmental radioactivity analysis. The China Institute of Metrology purchased the “Automated Radiochemical Analysis System for Liquid Effluents from Nuclear Facilities” and the “Inductively Coupled Plasma Mass Spectrometer for Radionuclide Analysis”, mainly involving the super microwave digester, automatic solid phase extractor, customized liquid processing platform and inductively coupled plasma mass spectrometry system produced by the company. The in-depth cooperation between the two sides will promote research and development of key measurement technologies and achievements, and establish a more comprehensive and accurate radionuclide analysis standard system. Promote the improvement of the accuracy of environmental radiation monitoring.
The company's products are used in a wide range of fields, and ICP-MS/MS technology has been recognized again. In March, the company successfully released LabMS 5000 ICP-MS/MS for the semiconductor field, which can provide customers in the semiconductor field with more accurate test results; medical companies respond to the needs of pharmaceutical companies in the R&D and production process to develop products that meet the maximum market; atomic fluorescence and other product lines further expand industries such as new energy, rare earth smelting, magnetic materials, solid waste, etc.; in May, the company signed a “capital increase agreement” with Suzhou Innovison Instruments and others. It is expected that its wholly-owned subsidiary, Dalian Elit, will participate in indirect shares in liquid phase chromatography. The expansion of the company's chromatography business has produced good synergy; in September, LabMS 5000 ICP-MS/MS won the 2023 China Association for Analysis and Testing Science and Technology Gold Award.
Investment recommendations and valuation: According to the company's three-quarter report, we adjusted our profit forecast. We estimate that the company's revenue for 2023-2025 will be 441 million yuan, 599 million yuan, and 599 million yuan respectively, with growth rates of 24.3%, 20%, and 13%, respectively. Net profit is 49 million yuan, 66 million yuan, and 81 million yuan, respectively, with growth rates of 11%, 34%, and 22% respectively. Maintain an “overweight” investment rating.
Risk warning: Product development and development fall short of expectations, cross-border operations fall short of expectations, risk of agency business changes, and increased market competition.