Incident: The company achieved revenue of 40.34 billion yuan (+2.5%) for the full year of 2023, excluding COVID-19 commercialization projects, an increase of 25.6% year over year; net profit to mother was 9.61 billion yuan (+9.0%); adjusted non-IFRS net profit to mother was 10.86 billion yuan (+15.5%).
The five major sectors are working together, and performance continues to grow steadily. (1) The chemical business achieved revenue of 29.17 billion yuan, an increase of 1.1% year on year. Excluding specific commercial production projects, the revenue of the chemical business segment increased strongly by 36.1% year on year; (2) the testing business achieved revenue of 6.54 billion yuan, an increase of 14.4% year on year. Laboratory analysis and testing services revenue was 4.78 billion yuan, up 15.3% year on year; (3) biology business achieved revenue of 2.55 billion yuan, up 3.1% year on year; (4) ATU business achieved revenue of 1.31 billion yuan, up 0.1% year on year; (5) DDSU achieved revenue of 730 million yuan, down 25.1% year on year due to active iterative business upgrades.
The customer base is sticky and constantly expanding, and on-hand orders are growing strongly. The company's customer stickiness is strong. In 2023, the original customers contributed 39.63 billion yuan in revenue, excluding COVID-19 projects, which increased 30% year-on-year, accounting for 98% of total revenue. At the same time, the company continued to expand its customer base, adding more than 1,200 new customers in 2023, contributing 710 million yuan in revenue to the company. By the end of 2023, the company's on-hand orders excluding COVID-19 commercialization projects increased 18% year over year. Among them, TIDES's current orders increased significantly by 226% year over year, laying a solid foundation for subsequent operations.
Continue to strengthen platform capacity building and improve the efficiency of asset utilization. The company has now established 32 operating bases and branches around the world. In 2023, the production capacity of 55,000m2 of new test facilities in Suzhou and Qidong was released in an orderly manner, and a total of 20,000 m2 of GLP qualified facilities were added. In addition, the company completed capacity expansion projects at the Changzhou and Taixing bases. The new production capacity was put into use in January 2024, and the volume of the peptide solid phase synthesis reactor was increased to 32,000 L. In January 2024, part of the new Taixing API production base was officially put into operation, enabling continued business growth.
Considering fluctuations in industry sentiment, we lowered the company's 2024-2025 earnings per share to 3.36 yuan and 3.90 yuan (the original forecast values were 4.26 yuan and 5.19 yuan), respectively, and added 2026 earnings per share to 4.79 yuan. According to comparable companies, we believe that the current reasonable valuation level of the company is 19 times the price-earnings ratio of 2024, and the corresponding target price is 63.84 yuan, maintaining the purchase rating.
Risk warning
The risk of declining demand in the pharmaceutical R&D service market, the risk of demand for new molecules falling short of expectations affecting capacity utilization, the risk of increased competition in the pharmaceutical R&D service industry, the risk of changes in overseas operations and international policies, and the risk of changes in industry regulatory policies.