Introduction to this report:
The company's 2023 performance is in line with expectations. Industrial and consumer product testing is growing well. The pharmaceutical and medical sector is under pressure in the short term and continues to invest in the strategic circuit, which is expected to start new growth.
Key points of investment:
Maintain an increase in holdings rating. Considering the short-term pressure on the pharmaceutical and medical sector, the 2024-25 EPS was lowered to 0.62/0.71 yuan (originally 0.62/0.74 yuan), and the 2026 EPS was added by 0.80 yuan. Referring to the 2024 industry valuation, the company was given 23 times PE in 2024, maintaining a target price of 14.26 yuan, and increasing the holding rating.
Performance is in line with expectations: The company announced its 2023 annual report, achieving net profit of 5.605 billion yuan (+9.24% year over year) and net profit to mother in 2023, which is in line with expectations; 2023Q4 achieved revenue of 1,523 billion yuan (+0.47% year over year) and net profit to mother of 169 million yuan (-29.27% year over year); 2024Q1 achieved revenue of 1,192 million yuan (+6.70% year over year), net profit to mother of 133 million yuan (-8.12% year on year).
Industrial and consumer product testing is growing well, and the pharmaceutical sector is under pressure in the short term. In 2023, the company's life science achieved revenue of 2,497 billion yuan (+8.72%), food and environmental testing developed steadily; industrial testing achieved revenue of 1,091 million yuan (+20.72% year over year), and “new energy + new grid” new track testing achieved good growth; consumer goods testing achieved revenue of 979 million yuan (+36.72% year over year). New energy vehicle testing and semiconductor testing are expected to develop rapidly; trade assurance achieved revenue of 700 million yuan (+5.63% year over year), maintaining steady growth; pharmaceutical and medical services achieved revenue At 340 million yuan (-8.85% year over year), the decline in demand for infectious business is under pressure in the short term.
Continue to invest in the strategic circuit to create a second growth curve. The company continues to increase investment in fields such as new energy vehicles, ships, aviation testing, chip semiconductors, and dual-carbon testing, hoping to bring new growth to the company.
Risk warning: The recovery in demand for medical testing falls short of expectations; the expansion of semiconductor testing falls short of expectations.