Description of the event
The company released its 2023 three-quarter report. The company's revenue for the first three quarters was 3.242 billion yuan, a year-on-year decrease of -1.19%; net profit was 901 million yuan, an increase of 0.23% over the previous year. Among them, revenue for the third quarter alone was 1,135 billion yuan, down 6.33% year on year; net profit was 355 million yuan, down 2.82% year on year.
Incident comments
Regular business maintained steady growth. The year-on-year decline in performance for the first three quarters of 2023 was mainly due to the decline in demand for COVID-19 testing and the growth in chemiluminescence and microbiology product lines, taking into account the impact of falling inventory prices. The impact of the company's installed revenue policy on chemiluminescence equipment and assembly lines is still under pressure throughout the year, although marginal improvements have been made.
Gross margin has been rising steadily, and profitability has been stable. In the first three quarters of 2023, the company's sales expenses were 542 million yuan, up 5.04% year on year; management expenses were 134 million yuan, up 16.80% year on year; and financial expenses were 3.2712 million yuan, mainly due to the impact of interest income and exchange profit and loss. The company's comprehensive gross margin increased from 59.90% in the same period in 2022 to 64.59%, mainly due to an increase in the share of immunization reagents for high-margin products.
Deeply involved in research and development, full product line layout for in vitro diagnosis. The company has a technology research and development system centered on Zhengzhou and Beijing, Shanghai, Shenzhen, Suzhou and North American R&D centers. The company invested 462 million yuan in R&D in the first three quarters of 2023, an increase of 16.27% over the previous year. The products cover fields including immunity, microorganisms, biochemistry, molecules and coagulation. In terms of developing new mass spectrometry products, the company has carried out preliminary research on time-of-flight mass spectrometry projects, carried out clinical registration of nucleic acid mass spectrometry products, completed preparations for the launch of mass spectrometry quality control products, and completed small tests on drug sensitivity kits; the triple quadrupole liquid-quality combination system has completed mass spectrometry system performance tests, and supporting equipment has begun to build a verification platform.
Be optimistic about the company's future development and maintain a “buy” rating. We expect the company's revenue for 2023-2025 to be 4,588 billion yuan (+3%), 5.552 billion yuan (+21%), and 6.828 billion yuan (+23%), respectively; net profit for 2023-2025 is 1,238 billion yuan (+6%), 1,515 billion yuan (+22%), and 1,893 billion yuan (+25%), respectively. The current stock price corresponding to 2023-2025 PE is 22, 18, and 15 times, respectively, maintaining a “buy” rating.
Risk warning
1. Risk of seed business sales falling short of expectations;
2. Risks of the collection and expansion of chemiluminescence business.