Incident: Recently, the company released its 2023 annual report. Revenue in 2023 was 3,930 billion yuan, up 28.97% year on year; net profit to mother was 1,654 billion yuan, up 24.53% year on year. Net profit after deducting non-return to mother was 1,547 billion yuan, an increase of 24.72% over the previous year. Among them, Q4 revenue in '23 was 1,022 million yuan, up 36.16% year on year; net profit to mother was 467 million yuan, up 15.77% year on year; net profit after deducting non-return to mother was 446 million yuan, up 14.98% year on year.
Comment:
The company's performance continues to grow, and development is steady, moderate and positive: the company achieved operating income of 3,930 billion yuan (YOY +28.97%) and net profit of 1,654 billion yuan (YOY +24.53%) in 2023. With the gradual recovery in the number of people diagnosed and treated at domestic medical institutions since the second quarter of '23, it has driven a steady increase in demand for in vitro diagnostic testing. The centralized regulation of the domestic pharmaceutical industry, which began at the end of July '23, has accelerated the market growth of enterprises with core product competitiveness. Centralized inter-provincial procurement led by Anhui Province will also help leading companies represented by new industries accelerate domestic replacement and increase market concentration.
Strong R&D investment continues, and a number of major products have been approved: 366 million yuan was invested in R&D in 2023, an increase of 15.21% over the previous year. By the end of '23, the number of R&D personnel in the company had reached 693, an increase of 15.50% over the previous year; the company had obtained a total of 335 invention patents, including 142 invention patents, 133 utility patents, and 60 design patents. In 2023, the company successively obtained a series of registration certificates for reagents such as tacrolimus and total triiodothyronine. By the end of 2023, the company had obtained 245 domestic chemiluminescence test reagent registration certificates, 85 biochemical test reagent registration certificates, and 7 registration certificates for coagulation diagnostic reagents; the company sold a total of 199 chemiluminescence reagents worldwide, including 188 chemiluminescence reagents and 61 biochemical reagents approved by the European Union. In March 2024, the smart laboratory solution SATLARS T8 developed by the company was released. A number of products have been approved to help the company's long-term development.
Combining industry, education and research in overseas markets, medium and large installations have achieved new breakthroughs: the company has pioneered academic promotion in overseas markets and built an exchange platform for domestic and foreign experts, effectively enhancing the global influence of the company's brand. In 2023, the company sold a total of 3,564 fully automated chemiluminescence instruments in overseas markets. The sales share of medium and large luminescent instruments increased to 56.73%, an increase of 20.19 percentage points over the same period last year. With the rapid increase in the number of installed machines in overseas markets and the continuous increase in the share of medium and large machines, it has laid a solid foundation for the subsequent growth of the overseas reagent business.
Profit forecast, valuation and rating: The company is a leading enterprise in the domestic chemiluminescence industry. With the continuous improvement of the company's global marketing network, the continuous expansion of domestic and foreign customers, and the expansion of the layout of biochemical diagnosis and molecular diagnosis segments, we expect the company to continue to grow steadily. However, considering the impact of industry policies, we slightly lowered the company's 2024-2025 EPS forecast to 2.64/3.34 yuan (the original forecast was 2.68/3.41 yuan, down 1.5%/2.1%, respectively), and also introduced the 2026 EPS forecast value of 4.19 yuan. The current price corresponds to 24-26 PE 25/20/16 times, maintaining the company's “buy” rating.
Risk warning: the risk of a single risk in the main business, the risk that the progress of new product development and listing falls short of expectations, exchange risk, and the risk that the collection price reduction exceeds expectations.