The company predicts a net loss of 113-129 million yuan in 2023
The company released a performance forecast: In 2023, revenue was 2.02-224 million yuan, down 23-31% year on year, net loss to mother was 113-129 million yuan, a year-on-year decrease of 152-168 million yuan, after deducting non-net loss of 118-135 million yuan, a year-on-year decrease of 149-166 million yuan, and R&D expenses of 0.48-53 million yuan, an increase of 38-52% year on year. The performance fell short of our expectations, mainly due to poor CDMO demand and increased costs after the Lingang base was put into operation.
Key points of interest
Demand for CDMOs is weak, and capacity utilization is expected to increase. Revenue growth slowed, mainly due to the slowdown in global and domestic biomedical investment and financing, which led to CGT CDMO downstream customer progress being weaker than expected, and the company's CDMO business expansion, order size, and project delivery were adversely affected. Profit margins are under pressure, mainly due to a sharp increase in personnel costs, management expenses, etc. after the first phase of the Lingang base was put into operation, and depreciation and amortization costs, administrative expenses, and market development expenses increased a lot, but the capacity utilization rate is still climbing.
Maintain strong investment in R&D and consolidate technology platform construction. The R&D cost for 1-3Q2023 was 38.58 million yuan, +62.47% over the same period, and the R&D cost rate reached 28.16%. It mainly focuses on R&D optimization of cutting-edge non-viral vectors such as mRNA and exosomes, development of cutting-edge cell culture technology processes, and development of detection technology. In 2023, the company expects R&D expenses to be 48,000-53 million yuan, an increase of 38-52% over the previous year. According to the company's announcement, as of 2023H1, 1) in terms of lentivirus, the csLenti lentivirus packaging system (used to overcome the production of non-toxic lentivirus vectors) has further expanded the scope of application, increasing virus production for various lentiviral vectors. Combined with other optimized lentivirus production for CAR-T, production can be increased by 40% to 1100%. The newly developed Paslenti lentivirus packaging system, which is conducive to lncRNA expression, was successfully tested and has been granted a national invention patent. 2) In terms of adeno-associated viruses, a traditional AAV Shuffling library was constructed using the capsid sequence of 38 wild-type AAVs as a template, and the AAV targeted Shuffling library scheme was innovatively designed, etc.
Profit forecasting and valuation
Due to low demand for CDMO and increased costs after the Lingang base was put into operation, we lowered our 2023/2024 net profit to -121 million yuan/-131 million yuan (previously -49 million yuan/03 billion yuan). Since the company is the leading domestic CGT CDMO, it is scarce, and the CGT circuit has strong long-term growth, we only lowered our target price by 20.4% to 8.20 yuan (based on the DCF valuation method), which has 12.6% upside compared to the current stock price.
risks
Downstream demand fluctuates, regulatory policies change, market competition intensifies, and customer commercialization falls short of expectations.