Description of the event
On October 31, 2023, Nanmo Biotech released its 2023 three-quarter report: in the three quarters of 2023, it achieved operating income of 87 million yuan (+2.08% year-on-year) and net profit of -12 million yuan; the first three quarters of 2023 achieved operating income of 268 million yuan (+24.39% year-on-year), and realized net profit of -15 million yuan.
Incident comments
Revenue was basically the same year over year, and profit continued to be under pressure. Revenue side: In the third quarter of 2023, the company achieved revenue of 87 million yuan (+2.08% year-on-year), and achieved revenue of 268 million yuan in the first three quarters of 2023 (+24.39% year-on-year). The year-on-year revenue growth rate for the third quarter alone slowed, mainly because downstream industrial customers were affected by the investment and financing environment and were under financial pressure. Industrial revenue declined, but demand from research customers was good, revenue on the research side grew relatively rapidly, and the company's overall revenue remained at a stable level.
Expense side: In the third quarter of 2023, sales expenses were 15 million yuan (+111.48% yoy), management expenses were 15 million yuan (-30.98%), R&D expenses were 19 million yuan (-11.44% yoy); the company's sales expenses for the first three quarters were 39 million yuan (+88.17%), management expenses were 40 million yuan (-12.17% yoy), and R&D expenses were 58 million yuan (+29.78% yoy). The large increase in sales expenses is mainly due to the company's active exploration of overseas markets, expansion of domestic sales teams and expansion of overseas sales teams, and strengthening promotion efforts for business development.
Profit side: In the third quarter of 2023, the net profit of the mother was -12 million yuan, and the net profit of the mother was -115 million yuan in the first three quarters. Profit continues to be under pressure, mainly due to the low growth rate of operating income, the continuous increase in the cost of expanding production scale, and the continued increase in sales expenses and R&D expenses, which have led to a decline in net profit.
Research and development investment continues to increase, and new disease models are being actively deployed. In 2023, R&D investment for the third quarter was 119 million yuan, R&D investment for the first three quarters was 58 million yuan (+29.78% year-on-year), and R&D investment in the first three quarters accounted for 21.77% of revenue (up 0.90 pct year on year). The company continues to strengthen R&D efforts, expand the number of standardized model lines, supplement humanized model verification data, and at the same time increase R&D investment in emerging diseases such as neurodegenerative diseases, autoimmune diseases, and metabolic diseases to cope with changes in industry trends.
Profit forecast: The company's 2023-2025 operating income is estimated to be 413 million yuan, 549 million yuan and 734 million yuan respectively, and net profit of 12 million yuan, 28 million yuan and 53 million yuan respectively, corresponding to EPS of 0.15 yuan, 0.35 yuan and 0.69 yuan respectively, maintaining the “buy” rating.
Risk warning
1. Industry competition increases risk;
2. Risk of product development failure.