Core views:
The company released its 2023 performance report. In 2023, the company achieved revenue of 622 million yuan (+20.45%, the following are year-on-year caliber), net profit of 159 million yuan (-3.46%), net profit after deducting non-return to mother of 107 million yuan (+5.09%), of which 2023Q4 achieved revenue of 167 million yuan (+28.46%), net profit of 41 million yuan (+10.81%), net profit after deducting non-return to mother of 25 million yuan (+4.17%). The decline on the profit side was mainly due to the company's new production capacity, overseas sales network construction, and increased R&D expenses As a result, the results were in line with expectations.
Innovative products continue to be launched, and overseas business continues to grow rapidly. The company continues to increase investment in R&D, keep up with industry R&D hotspots, and continue to launch innovative mouse models in non-tumor fields such as autoimmune diseases, cardiovascular and metabolic diseases, and neurodegenerative diseases. The variety of products continues to be rich, and based on product advantages, it drives rapid growth in related functional pharmacodynamic services. At the same time, the company continues to advance its internationalization strategy, cooperates deeply with key customers in Europe, North America and the Asia-Pacific region to meet the R&D needs of overseas customers with a variety of product categories, and maintains rapid growth in overseas business.
The phased increase in expenses has put pressure on the profit side in the short term. Compared with steady growth on the revenue side, the company's profit side is under pressure. It mainly continues to promote various large-scale R&D projects such as “humanization of antibodies”, “drug screening program”, and “real world animal models”, introducing a number of high-level R&D personnel, further expanding the size of the R&D team, and increasing R&D expenses. At the same time, subsidiaries such as Beijing and Shanghai have added production capacity. On the one hand, relevant production personnel need to prepare reserves in advance, leading to a phased increase in labor costs. On the other hand, production capacity is in a climbing phase, resulting in lower gross margins.
Profit forecasting and investment advice. We expect the company's EPS to be 0.39, 0.50, and 0.63 yuan/share in 23-25, respectively. Considering that the company is a leading model animal enterprise, capacity construction and market expansion continue to advance, while continuing to launch innovative products and innovative platforms, the company will be given a PE valuation of 40 times in 2024, corresponding to a reasonable value of 19.85 yuan/share, giving it a “buy” rating.
Risk warning. Technology upgrade iterative risk; risk of failure in new product development; risk of downstream R&D demand falling short of expectations; increased risk of industry competition; risk of overseas market expansion falling short of expectations.