The business bucked the trend, with revenue exceeding 1 billion for the first time, and performance exceeded expectations. In 2023, it achieved revenue of 1,044 million yuan (+23.91%) and net profit to mother of 256 million yuan (-2.84%). The year-on-year decline in net profit to mother was mainly due to the company's completion of technology transfer of SDC2 products in 2022, which generated non-recurring profit and loss of 80.39 million yuan. The company's net profit withheld from non-return mother in 2023 was 234 million yuan, an increase of 48.96% year on year. Among them, revenue for the fourth quarter was $336 million (+38.31%), and net profit to mother was $83 million (+108.45%), showing a strong growth trend in the fourth quarter. Facing the new situation in the medical industry in 2023, the company continued to expand the in-hospital market through compliant admissions, and achieved countertrend growth. Revenue exceeded 1 billion yuan for the first time, while further improving operating efficiency. The cost ratio declined, profitability improved markedly, net profit after deduction reached a record high, and its leading position in the industry became more stable.
The company was successfully approved for the MSI test kit, and the PD-L1 kit was recommended by an authoritative guide. In early November 2023, the human microsat instability (MSI) test kit (fluorescence PCR - capillary electrophoresis) developed by the company was approved for registration for the accompanying diagnosis of tirelizumab. It is currently the first pan-solid tumor immunotherapy concomitant diagnosis approved for marketing in China. In the field of colorectal cancer diagnosis and treatment, MSI and the KRAS, BRAF, and NRAS genes were included in expert consensus. The company was approved to market KRAS/NRAS/BRAF joint testing products in 2015, which can be used in combination with MSI diagnostic products to fully meet the rigid needs of colorectal cancer patients. In the recently released “Chinese Expert Consensus on Clinical Testing of PD-L1 Expression in Non-small Cell Lung Cancer (2023 Edition)”, Ed Biotech's PD-L1 test kit (clone number E1L3N, Guowei approval 20223400313) received priority recommendations as a representative product of domestically produced reagents to accompany immunotherapy. It is expected to accelerate hospital entry and increase clinical penetration in the future.
The company promotes large repurchases and boosts market confidence. On February 26, the company announced that it plans to use its own capital of not less than 100 million yuan and no more than 200 million yuan to repurchase shares. The repurchase price will not exceed 28 yuan/share, and the repurchased shares will be used to cancel and reduce the company's registered capital. Assuming that the maximum capital limit for this repurchase is 200 million yuan and the maximum share price limit is 28 yuan/share, the estimated number of shares that can be repurchased is 7.142,900 shares, accounting for about 1.79% of the company's current total share capital.
Investment advice: Based on the quick performance report, the 2023-2025 profit forecast is raised. The estimated net profit for 2023-2025 is 2.56/3.19/396 million yuan (originally 2.39/2.93/367 million), up -2.8%/24.6%/24.2% year-on-year; the current stock price corresponds to PE 36/29/23 times. Ed Biotech is a leading enterprise in the field of accurate tumor diagnosis. It has built a comprehensive companion diagnostic product system from targeted therapy to immunotherapy. It is expected to share the dividends of the times for precise tumor treatment. At the same time, the products will successfully go overseas, accelerate the development of international markets, have broad scope for medium- to long-term development, and maintain a “buy” rating.
Risk warning: R&D progress falls short of expectations; overseas sales promotion falls short of expectations; risk of price reduction in collection.