Dongfulong announced the results announcement for the third quarter of 2023: in the first three quarters of 2023, it achieved operating income of 4.325 billion yuan, a year-on-year increase of 13.31%; net profit attributable to shareholders of listed companies was 583 million yuan, a year-on-year decrease of 3.48%; and net profit attributable to shareholders of listed companies after deducting non-recurring profits and losses of 539 million yuan, a year-on-year decrease of 4.84%.
Key points of investment
Performance is in line with expectations, and revenue is growing steadily
In the first three quarters of 2023, the company achieved revenue of 4.325 billion yuan, an increase of 13.31% over the previous year; by business, the company's formulation division, bioprocess division and engineering division achieved revenue of 2,482 million yuan, 999 million yuan and 394 million yuan respectively, accounting for 57.4%, 22.87% and 9.13%, respectively. In the first three quarters, the company achieved net profit of 583 million yuan, a year-on-year decrease of 3.48%, mainly due to changes in product structure. In terms of cost rates, the company's sales expense ratio, management expense ratio, financial expense ratio, and R&D expense ratio were 5.67%/8.84%/-1.21%/6.23% respectively in the first three quarters, and all cost rates remained basically stable.
Actively expand overseas markets, and profitability is expected to continue to improve
As a pioneer in domestic pharmaceutical equipment going overseas, the company's overseas products are highly complex, there are many systematic orders, and outstanding profitability. In the first half of 2023, the gross margin of the company's overseas business reached 50.5%, achieving overseas revenue of 581 million yuan, with export sales accounting for 19.7% of revenue. As of the release date of the 2023 interim report, the company's business has covered more than 40 countries and regions around the world, serving nearly 3,000 world-renowned pharmaceutical companies, and the internationalization strategy has been very effective. As the delivery of the company's overseas products accelerates, its contribution to overseas market performance is expected to increase further, and market development efficiency is expected to continue to be unleashed.
Production capacity expansion is progressing in an orderly manner, while the advantages of scale are gradually realized
During the reporting period, the company actively promoted the construction of production capacity projects and increased production capacity. Among them: the biopharmaceutical equipment industry trial production center project raised 530 million yuan and is expected to be put into operation in 2026; the life science industrialization base project of Zhejiang Dongfulong Biotechnology Co., Ltd. raised 860 million yuan. The main construction has been completed and is expected to be put into operation in 2025; and the Jiangsu biomedical equipment industrialization base project raised 620 million yuan, which is expected to be put into operation in 2025. The implementation of new production capacity is imminent, and performance elasticity is expected to gradually materialize.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 59.34, 7.0.49, and 8.388 billion yuan respectively, EPS will be 1.04, 1.25, and 1.50 yuan respectively, and the current stock price corresponding to PE will be 17.4, 14.5, and 12.0 times, respectively. The company is a leader in domestic pharmaceutical equipment. Thirty years of industry accumulation have created strong manufacturing technology advantages, and the business has expanded into high-growth emerging fields such as life science, so it is optimistic about future product releases. Maintain a “buy” investment rating.
Risk warning
Product delivery falls short of expectations, risk of increased market competition, risk of slow recovery of downstream demand, risk of production capacity falling short of expectations, risk of fund-raising project progress falling short of expectations, import substitution falls short of expectations, industry policy and government regulation risks, geopolitical risks