Matters:
The company released financial reports. In '23, the company achieved revenue of 4.444 billion yuan (+0.05%), a year-on-year increase of 16.64% after excluding the impact of COVID-19 testing-related revenue, net profit to mother of 1,217 billion yuan (+4.28%), after deducting non-net profit of 1,185 billion yuan (+5.86%). In 24Q1, the company achieved revenue of 1,089 million yuan (+5.09%), net profit attributable to mother of 324 million yuan (+33.93%), and deducted non-net profit of 314 million yuan (+33.15%).
Commentary:
Regular business grew steadily in 23 years, and overseas business progressed rapidly. Excluding the impact on revenue related to COVID-19 testing, the company's revenue in 2023 increased 16.64% year over year. By product type, reagent revenue was 38.15 billion yuan (+8.06%), and instrument revenue was 482 million yuan (-32.99%). By product application area, revenue from immunodiagnostic products in 2023 was 2,483 million yuan (+23.77%), revenue from microbiological testing products was 323 million yuan (+18.65%), and revenue from biochemical testing products was 250 million yuan (+20.54%). The company's overseas revenue in 2023 was 209 million yuan (+60.53%), maintaining a rapid growth trend. The company is actively expanding overseas channels and has established long-term friendly cooperative relationships with more than 120 overseas distributors at the end of 2023.
Gross margin increased in '23, boosting profit levels. In 2023, the company's overall gross margin was 65.07% (+5.23pct), of which the gross margin of reagent products increased to 70.94% (+4.36pct) year-on-year, leading to an increase in overall gross margin. In 2023, the company's sales expense ratio was 17.18% (+1.02pct), the R&D expense ratio was 14.77% (+1.97pct), the management expense ratio was 4.13% (+0.43pct), and the financial expenses ratio was 0.20% (+0.25pct). The overall cost ratio increased. The net profit margin was 27.40% (+1.12pct), and the profit level increased to a certain extent, driven by gross margin.
Research and development results are outstanding, and new products are being launched one after another. During 2023, the company's fully automatic biochemical analyzer AutoChem B801 series was approved, the fully automatic microbial mass spectrometry testing system Autof ms obtained the first European Union product registration certificate, the Sikun 2000 series of genetic sequencers launched by its wholly-owned subsidiary Sikun Biotech was launched in the non-clinical field, and the partner Hiken Medical's fully automatic coagulation analyzer AutoSimo C6000 was approved. The continuous launch of new products laid a solid foundation for the company's long-term development.
Profit levels increased significantly in Q1 in '24. The company's gross margin further increased to 64.52% (+3.46pct) in Q1. In addition, the net profit margin for 24Q1 increased to 29.77% (+6.41pct), resulting in a significant increase in profit levels in Q1.
Investment advice: The company's 2024 Q1 performance is in line with expectations. Combined with the 2023 results, we expect the company's net profit to be 15.1, 18.9 billion yuan, and 2.39 billion yuan (the original forecast values for 24-26 were 15.7 billion yuan and 1.94 billion yuan), up 23.7%, 25.6% and 26.5% year-on-year, and EPS was 2.57, 3.23, and 4.08 yuan, respectively, corresponding to PE 21, 17 and 13 times, respectively. According to comparable company valuations, the company was given a valuation of 24 times in 2024, corresponding to a target price of about 62 yuan, maintaining a “recommended” rating.
Risk warning: 1. The installed volume of chemiluminescence instruments does not meet expectations; 2. The installed assembly line does not meet expectations.