Incidents:
The company released its 2023 annual report, achieving full year operating income of 3,930 billion yuan (YoY +28.97%), net profit attributable to mother of 1,654 billion yuan (YoY +24.53%), and net profit not attributable to mother of 1,547 billion yuan (YoY +24.72%). With 2023Q4, the company achieved operating income of 1,022 million yuan (YoY +36.16%), net profit attributable to mother of 467 million yuan (YoY +15.77%), and net profit not attributable to mother of 446 million yuan (YoY +14.98%).
Comment:
1. The company's domestic and foreign business was in line with expectations, and the gross margin level was further optimized. In 2023, the company maintained a good growth trend with domestic revenue of 2,601 billion yuan (+25.53%) and overseas revenue of 1,319 billion yuan (+36.16%). In terms of the cost ratio, the sales expense ratio was 16.04% (+0.98pct), mainly due to an increase in marketing activities such as academic promotion of conventional products; the management expense ratio was 2.72% (+2.56pct), mainly due to changes in equity incentive expenses; the financial expense ratio was -0.78% (+1.6pct), mainly due to changes in exchange profit and loss; with the resumption of sales of conventional products and a significant increase in the installed capacity of medium and large machines, the overall gross margin increased to 72.96% (+2.7pct).
2. High-speed machines accelerate breakthroughs for medium and large domestic customers, and increased stand-alone output drives reagent revenue growth.
In 2023, the company continued to promote the new generation of high-speed chemiluminescence analyzers MAGLUMI X8 and X6 to accelerate the expansion of domestic medium and large medical terminal customers. Throughout the year, 155 new tertiary hospitals were added, including the top 67, and 1,465 new fully automatic chemiluminescence analyzers were installed, of which large machines accounted for 63.34%. The increase in installed capacity of large-scale light-emitting instruments and assembly lines, on the one hand, led to a 33.53% year-on-year increase in domestic instrument revenue. At the same time, it also effectively promoted the increase in instrument yield and the release of related reagents, and achieved a 23.73% year-on-year increase in domestic reagent business revenue. Furthermore, in the Anhui Alliance IVD reagent collection, which ended in December 2023, the company selected Group A, which is expected to obtain considerable procurement volume and further promote the penetration of the company's products in the domestic market.
3. Continue to promote the construction of overseas subsidiaries, improve the localized layout, and significantly increase the share of medium to large machines to promote steady growth in international business. The company insists on academic promotion to enhance the international influence of the Snibe brand, while continuing to strengthen the comprehensive service quality for regional markets. In 2023, the company added 3 new overseas subsidiaries (Italy, Romania and Saudi Arabia) in key markets, and established an Indonesian subsidiary in January 2024. Since then, it has established 10 overseas subsidiaries, making every effort to develop markets in various key regions. In 2023, 3,564 new fully automatic chemiluminescence instruments were installed in overseas markets, of which medium and large machines accounted for 56.73% (+20.19pct). The company's chemiluminescence reagents have received 188 CE approvals, covering various fields such as tumors, infectious diseases, sugar metabolism, and self-immunity. With the continuous increase in instrument installation and the rapid increase in the share of medium and large machines, the overseas reagent business achieved a year-on-year increase of 54.56% in 2023, and is expected to continue to be released steadily.
Profit forecast: We expect the company's 2024-2026 revenue to be 50.21, 63.02, and 7.876 billion yuan respectively, with year-on-year growth rates of 27.77%, 25.52%, and 24.97% respectively, and net profit to mother of 20.90, 26.67, and 32.18 billion yuan respectively. The year-on-year growth rates are 26.39%, 27.63%, and 20.66%, respectively, corresponding to the current stock price PE, which is 25, 19, and 16 times, respectively, maintaining the “recommended” rating.
Risk warning: Mining implementation falls short of expectations, R&D progress falls short of expectations, new product sales fall short of expectations, increased market competition, risk of industry policy adjustments, fall short of expectations in overseas market expansion, risk of changes in the international situation, etc.