Results announcement: Revenue of 40.341 billion yuan (+2.51%) for the full year of 2023, and net profit to mother of 9.607 billion yuan (+9.00%).
Business split: (1) Chemical business revenue of 29.17 billion yuan (+1.12%), gross profit margin of 44.52% (+4.52pcts); of which D&M business revenue was 21.62 billion yuan (-0.1%), excluding specific commercial production projects, D&M business revenue increased 55.1% year over year; TIDES business continued to expand, with revenue of 3.41 billion yuan (+64.4%) in 2023. By the end of 2023, TIDES's on-hand orders had a significant increase of 226% year over year. (2) Testing business revenue of 6.54 billion yuan (+14.36%), gross profit margin of 37.40% (+2.51pcts); of these, laboratory analysis and testing business revenue is 4.78 billion yuan (+15.3%), and CRO&SMO business revenue is 1.76 billion yuan (+11.8%). (3) Biology business revenue of 2.55 billion yuan (+3.13%), gross profit margin 40.35% (+1.60pcts). (4) High-end treatment CTDMO business revenue of 1.31 billion yuan (+0.12%), gross profit margin -10.04% (-3.36pcts). (5) Domestic new drug R&D service revenue of 730 million yuan (-25.08%), gross profit margin 35.72% (+9.50pcts).
The chemical business molecular pipeline continues to expand, and the peptide sector contributes to business growth. Drug Discovery (R) continued to drain, successfully synthesized and delivered more than 420,000 new compounds (+6%) in 12 months, and adhering to a long-term strategy, the number of new customers increased 12% year over year. A total of 1,255 molecules were added to the 2023 line. By the end of 23, the D&M molecular pipeline had a total of 3,201 molecules, of which the number of commercial/clinical phase III/clinical phase II projects was 61, 66, and 326, respectively. TIDES D&M serves 140 customers (+36%), and the number of service molecules is 267 (+41%). In terms of production capacity, production capacity expansion projects were completed at the Changzhou and Taixing bases. The new production capacity was put into use in January 2024, and the total volume of the peptide solid phase synthesis reactor increased to 3.2 wL.
Subsequent TIDES orders were a new driver for the company's subsequent growth.
Profit forecast and rating: The company's revenue for 2024-2026 is expected to be 403.82/450.41/50.36 billion yuan, respectively, up 0.1%/11.5%/11.1% year on year; net profit to mother is 97.14/107.05/11.774 billion yuan, respectively, up 1.1%/10.2%/10.0% year on year. Maintain a “buy” rating.
Risk warning: Capacity expansion falls short of expectations, industry competition intensifies, and cost control falls short of expectations