Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 4.444 billion yuan, an increase of 0.05% over the previous year, and achieved net profit of 1,217 billion yuan, an increase of 4.28% over the previous year; net profit after deducting non-return to mother was 1,185 billion yuan, an increase of 5.86% over the previous year. In the first quarter of 2024, the company achieved operating income of 1,089 million yuan, a year-on-year increase of 5.09%; realized net profit of 324 million yuan, an increase of 33.93% over the previous year; net profit after deducting non-return to mother was 314 million yuan, an increase of 33.15% over the previous year.
Comment:
The company's 23-year performance was under pressure, and net profit picked up in 24Q1: the company's revenue in 2023 was 4.444 billion yuan (YOY +0.05%), and net profit to mother was 1,217 billion yuan (YOY +4.28%). 24 Q1 achieved operating income of 1,089 million yuan (YOY +5.09%) and net profit to mother of 324 million yuan (YOY +33.93%). In 2023, the revenue growth rate of the immunodiagnosis, microbiological testing, and biochemical diagnosis business was stable, and the revenue of the molecular diagnostic and testing instrument business decreased by 79.18% and 30.47% year-on-year. The company's low revenue growth rate in 2023 is mainly due to a sharp drop in demand for COVID-19 testing products compared to '22. Excluding the impact of revenue related to COVID-19 testing, revenue increased by about 16.64% compared to the same period last year. The large increase in net profit to mother in Q1 in '24 was mainly due to lower operating costs and higher gross margin.
R&D investment is growing steadily, and the product line continues to be enriched: in 2023, R&D investment was 656 million yuan, an increase of 15.42% over the previous year. In 2023, the company obtained 60 new product registration (filing) certificates, covering magnetic particle chemiluminescence, chemiluminescence microparticle immunoassay, molecular diagnosis, etc., which has enriched the company's product range. In the field of biochemical diagnosis, the AutoChem B801 series of fully automatic biochemical analyzers obtained a medical device registration certificate; in the field of microbiological testing, the automatic microbial mass spectrometry testing system Autof ms series obtained the first European Union IVDR microbial mass spectrometry testing system product registration certificate; in the field of blood clotting testing, the company and its strategic partner Hiken Medical launched the AutoCIMO C6000. The continuous introduction of products in various product lines is expected to further increase revenue.
Strategic cooperation continues to advance and steadily expand domestic and foreign markets: In the first quarter of 2023 and 2024, the company reached strategic cooperation with many companies and associations, including Sinopharm Devices and China Resources Medical. The company exhibited many new products at large-scale exhibitions such as CACLP, Medlab Middle East, and German MEDICA to actively expand domestic and foreign markets. In 2023, the company passed advanced customs AEO certification, adding new impetus to overseas market expansion. Furthermore, the company took the lead in establishing the Institute of Bioinformatics of the Shanghai Institute of Experimental Medicine to promote the integration of “industry, education and research”. The strategic layout in various areas such as marketing and R&D helps enhance the company's competitive advantage and influence.
Profit forecast, valuation and rating: Considering the impact that the gradual implementation of industry collection policies may have on the company, we slightly lowered the company's net profit forecast for 24-25 to 15.18/18.55 billion yuan (the original forecast value was 15.95/1.929 billion yuan, down 5%/4%, respectively), and introduced the 26-year net profit forecast to 2.255 billion yuan. The current price corresponds to 24-26 PE 21/17/14 times. Considering that the company is a leading enterprise in the field of chemiluminescence in China and has a diverse product layout, we are optimistic about the company's long-term development and will continue to maintain a “buy” rating.
Risk warning: Market competition increases risk; risk of industry policy changes; risk of R&D falling short of expectations.