Net profit to the mother in 2023 was -67%, the profit forecast was lowered and the target price was released in the annual report and quarterly report. In 2023, the net profit to the mother was 2.47 million yuan (-34% YoY), net profit to the mother was 108 million yuan (-67% YoY), after deducting non-net profit of 84 million yuan (-69% YoY), and the net profit to the mother was in line with the performance forecast range (0.96 to 128 million yuan); 4Q23 revenue of 710,000 yuan (YoY -34%) and net profit of 2.41 million yuan (YoY -98%); 1Q23 net profit 24 Revenue of 330 million yuan (YoY) -36%), net profit attributable to mother - $98 million, a year-on-year loss. Changes in the external environment have led to a decrease in inspection orders in some industries and a reduction in operating income; we expect the company's EPS for 2024-2026 to be 0.54/0.70/0.88 yuan, respectively (previous value 0.67/0.85/- yuan). Comparable company Wind agreed that the average PE value in 24 was 21 times. Considering that the CAGR of the company's 24-26 net profit to mother was higher than the comparable average, the company was given 25 times PE in 24 years, with a target price of 13.50 yuan (previous value of 16.75 yuan), maintaining the “increase” rating.
The basic food testing market is stable, and environmental and medical testing revenue is under pressure in the short term. The company's life science, health, and environmental protection revenue was 1.98 billion yuan (-39% year over year). Mainly due to changes in the external environment, medical testing revenue declined sharply year on year; the sector's gross profit margin was 43.0% (+10.9pct year over year), mainly due to a decline in the share of revenue from the low gross margin business. Food testing has maintained a stable basic market. It once again successfully won the bid for food safety inspection tasks at the national level of the State Administration of Market Supervision and food safety inspection projects in many provinces and cities; in environmental testing, confirmation of national soil sampling and agricultural product quality and safety supervision projects was delayed, but Wuhan and Suzhou Sanpu Laboratories completed expansion, which is expected to contribute to revenue growth in 24 years; the pharmaceutical industry chain extended downward, and completed the acquisition of Hubei Zhongjia in 23, with a GMP production system and production capacity for APIs.
Revenue from automobiles and other consumer goods declined year-on-year, and special equipment testing is expected to generate an increase of 260 million yuan in automobile and other consumer goods revenue in 23 years; the Shanghai New Energy Laboratory was put into operation in 23, the testing capacity of the Wuhan Automobile Affiliated Office was enhanced, and the testing capacity of Suzhou Company in the field of automotive products was expanded; at the same time, the company has been recognized by several third-party laboratories of new energy vehicle manufacturers and selected as qualified third-party testing suppliers for many joint venture brands, with sufficient potential orders for automobile testing. Safety and security revenue in '23 was 130 million yuan (-16% YoY), mainly due to changes in the external environment, military orders fell short of expectations; the company completed the acquisition of Dingshengxin Testing, which is expected to contribute to the increase in inspection orders for special equipment such as elevators in '24. Electronic and electrical revenue in '23 was 79 million yuan (+12% year over year), and revenue growth declined year on year.
Risk warning: Brand and credibility are adversely affected; competition in the testing market is intensifying; new business development falls short of expectations.