occurrences
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.
Incident reviews
The luminescence business continued to grow steadily, with a growth rate of about 24.88% in 2023, and the company's core product, chemiluminescence reagents, maintained steady growth. In 2023, the company's immunological diagnosis revenue totaled 2.48 billion yuan (yoy +23.77%), of which chemiluminescence reagent revenue was 2,425 million yuan (yoy +24.88%); biochemical reagents revenue was 250 million yuan (yoy +20.54%), and microbiological diagnosis revenue was 323 million yuan (yoy +18.65%). Looking at the subregion, the company is also focusing on expanding overseas markets, with overseas revenue of 209 million yuan (yoy +60.53%) in 2023, and overseas markets are expected to continue to grow rapidly.
In the first quarter of '24, the company's luminescence reagents still achieved steady growth. Revenue from luminescence reagents was about 580 million yuan (yoy +16.7%). The company's light-emitting high-speed machines were promoted smoothly, and the proportion increased, and the annual high-speed machine installed capacity is expected to exceed 50%.
Investment in R&D expenses increased, and gross margin increased the company's gross profit margin by 65.07% in 2023, up 5.23pp year on year as the share of self-produced products increased. Mainly due to the continued increase in the share of high-margin self-produced reagents such as magnetic particle luminescence, the net profit margin was 27.55%, up 0.79pp year on year. 2024Q1's gross profit margin was 64.52%, up 3.46pp from the same period last year, and the net profit margin was 30.18%, up 6.33pp year on year.
In 2023, the company's sales expenses ratio was 17.18% (+1.02pp), management expenses rate 4.13% (+ 0.44pp), and R&D expenses rate 14.77% (+1.97pp). The company continues to increase investment in R&D and sales promotion of innovative diagnostic products, and related cost rates have increased.
The company invested 656 million yuan in R&D in 2023 (accounting for 14.77% of revenue). The company made progress in various fields. The company's NGS production line achieved production trial production and application testing of sequencing systems, and the Sikun 2000 series of genetic sequencers was launched in the non-clinical field; mass spectrometry production lines and nucleic acid mass spectrometry registration work are progressing steadily, and mass spectrometry quality control products have been launched, and drug sensitivity kits have entered the pilot phase. The development of the triple quadrupole liquid-quality combined system is progressing steadily according to the plan. The mass spectrometry system performance tests and inspection machine work have been completed, and the progress is in line with expectations.
Investment advice
We have increased our profit forecast for 2026. We expect the company's 2024-2026 revenue to reach 5.160 billion yuan, 6.236 billion yuan and 7.543 billion yuan respectively, with year-on-year increases of about 16.1%, 20.9% and 21.0%, respectively, and net profit to mother in 2024-2026 will reach 1,572 billion yuan, 1,973 billion yuan, and 2,548 billion yuan, respectively, with year-on-year increases of about 29.2%, 25.5% and 29.1%, respectively. EPS for 2024-2026 was 2.68 yuan, 3.36 yuan, and 4.35 yuan, respectively, and the corresponding PE valuations were 21x, 17x, and 13x, respectively. The company's product line layout is comprehensive, forming a full product line layout of “immunodiagnosis+biochemical diagnosis+microbiological diagnosis+molecular diagnosis”. The market share is gradually expanding, the comprehensive advantages are remarkable, and the “buy” rating is maintained.
Risk warning
High-speed machine installations have fallen short of the expected risk.
Competition in the industry heightens the risk.