Growing against the trend, the leading position in the industry was further stabilized. In 2023, the company achieved total revenue of 1,044 billion yuan, an increase of 23.91% over the previous year. This is due to the company's simultaneous expansion of domestic hospital markets and international markets in 2023, and effective expansion of cooperative business with pharmaceutical companies. On the profit side, the company achieved net profit of 256 million yuan in 2023, a year-on-year decrease of 2.84%. This is due to the company's completion of technology transfer of SDC2 products in 2022, generating non-operating income of about 80.39 million yuan. Second, in 2023, the company achieved net profit of 234 million yuan after deduction, an increase of 48.96% over the previous year. The growth rate was higher than the revenue growth rate. This was due to the steady increase in the company's operating efficiency as the scale of operations expanded, and the cost and expense ratio decreased.

R&D investment is accurate and orderly, and the product line continues to expand. The company attaches great importance to R&D innovation, and annual R&D investment accounts for more than 15% of current revenue. In November 2023, the company's human microsatellite instability (MSI) test kit (fluorescence PCR - capillary electrophoresis) was successfully certified. The product is suitable for the concomitant diagnosis of tirelizumab. Currently, MSI and PD-L1 (the company's PD-L1 antibody diagnostic reagent was approved for marketing in March 2022) have been included in authoritative domestic and international guidelines for multiple cancer types, and are currently the most clinically recognized biomarkers for predicting the efficacy of immunological drugs. Meanwhile, the company's MSI test kit is currently the first pan-solid tumor immunotherapy concomitant diagnosis approved for marketing in China, and it is expected that it will be released quickly after marketing. Furthermore, in August 2023, the company and AstraZeneca will further expand the scope of cooperation, and their 10-gene human mutation kit will be based on Enhertu? Drug development is associated with diagnostic use to screen NSCLC patients positive for HER2 (ERBB2) mutations. As new products are certified and launched one after another, the company's overall solution solution capability has gradually improved, and the company's competitiveness has been further strengthened.

Release a cancellation repurchase plan to boost market confidence. The company announced on February 26, 2024 that it plans to repurchase shares with its own capital of not less than 100 million yuan and no more than 200 million yuan. 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. Based on the upper and lower limits of the total repurchase capital and the upper limit of the repurchase price of 28 yuan/share, it is estimated that the number of shares that can be repurchased is between 3.5714 million shares and 7.142,900 shares, accounting for 0.90% to 1.79% of the company's current total share capital. This cancellation buyback will help strengthen market confidence.

According to the 2023 Earnings Report, we lowered the revenue growth rate for testing reagents, testing services, and pharmaceutical companies' cooperative business, and adjusted the 2023-25 net profit forecast to 2.56/3.06/3.78 (the original forecast for 23-25 was 2.72/3.55/4.41) billion yuan. According to the comparable company, PE was awarded 29 times in 24 years, and the corresponding target price was 22.33 yuan, maintaining the “gain” rating.

Risk warning

New product promotion falls short of expectations, overseas geopolitics influence international expansion, pharmaceutical companies' cooperative business progress falls short of expectations, etc.