Event: The company announced its 2023 results, with revenue of 1,742 billion yuan in 2023, up 15.27% year on year; net profit to mother was 524 million yuan, up 34.60% year on year. Net profit after deducting non-return to mother was $511 million, an increase of 32.51% over the previous year. Among them, Q4 revenue in Q23 was 508 million yuan, up 30.69% year on year; net profit to mother was 152 million yuan, up 27.22% year on year; net profit after deducting non-return to mother was 142 million yuan, up 15.78% year on year, and 23Q4 revenue performance was impressive.

Comment:

The company's various businesses have recovered, and operating development has picked up significantly: the company's 2023 revenue was 1,742 million yuan (YOY +15.27%), net profit to mother was 524 million yuan (YOY +34.60%), and net profit after deducting non-return to mother was 511 million yuan (YOY +32.51%). In 23 years, medical institutions across the country have been operating normally, and the company's business has returned to normal levels. The products cover biochemical immunity, blood coagulation, blood type, pathological diagnosis and accurate diagnosis, and sales revenue and profit have all increased.

R&D investment continues to increase, and the chemiluminescence circuit has a new layout: the company invested 163 million yuan in R&D in 2023, an increase of 18.73% over the previous year; 52 patent certificates and 34 medical device registration certificates were obtained during the reporting period.

Chemiluminescence is recognized as a high-quality circuit in IVD. Policy support has been remarkable in recent years, and there is a clear trend of domestic substitution.

23Q4's fully automatic chemiluminescence immunoanalyzers Gi1600, Gi2000, and Gi9000 have been approved successively, marking the company's official entry into the chemiluminescence field and helping the company to ensure the steady and sustainable development of the company through the synergistic effects of diversified layouts.

Sinopharm has great potential to empower and distribute products overseas: As of the end of 2023, China Pharmaceutical Investment held 16.63% of the company's shares, making it the company's largest shareholder. In September '23, Mr. Liang Hongjun was first hired as the company's general manager. In December '23, the company carried out division reforms, which will help Sinopharm to channel collaboration for the company's endogenous development and empowering M&A cooperation related to epitaxial development. In December 2023, Jiuqiang Holdings and ElitechGroup Inc. (EGI for short) signed a product distribution agreement. Cooperation between the two parties can reduce sales and promotion costs of related products, help increase brand awareness and open up overseas markets, increase overseas sales scale and market share, and help the company enter a new stage of going overseas.

Profit forecast, valuation and rating: We are optimistic about the progress of the company's new strategic development plan and the continued empowerment of Sinopharm, but considering the impact of factors such as collection, we lowered the 2024-2025 net profit forecast to 6.30/763 million yuan (the original forecast was 673/834 million yuan, down 6.4%/8.5%, respectively), and also introduced a net profit forecast value of 920 million yuan for 2026. The current price corresponds to PE 18/15/12 times in 24-26, taking into account the company's new overseas and luminescence business Expansion helps the company continue to grow, and we maintain the company's “buy” rating.

Risk warning: Risk of price reduction exceeding expectations, risk of changes in sales models, risk of new product development and listing progress falling short of expectations, and risk of stock price instability due to irregularities.