Key points of investment:
Incident: The company released the 2023 annual report and the report for the first quarter of 2024. In 2023, the company achieved operating income of 4.444 billion yuan (+0.05%), achieved net profit of 1,217 million yuan (+4.28%), and realized net profit after deduction of 1,185 million yuan (+5.86%); in Q1 2024, it achieved operating income of 1,089 million yuan (+5.09%), and realized net profit of 324 million yuan (+33.15%). The performance was in line with expectations.
The non-COVID-19 business is growing steadily, and product structure optimization has led to an increase in gross margin. Excluding the impact of COVID-19 testing-related revenue, the company's revenue in 2023 increased by about 16.64% year on year, including immunological diagnosis revenue of 2,483 million yuan (+23.77%), microbiological testing revenue of 323 million yuan (+18.65%), biochemical testing revenue of 250 million yuan (+20.54%); high gross margin chemiluminescence products recovered, and structural optimization led to an increase in gross margin. In 2023, the company achieved a gross profit margin of 65.07%, an increase of 4.01 pct year over year.
Increase investment in R&D and actively develop new products. In 2023, the company invested 656 million yuan in R&D, accounting for 14.77% of revenue. In 2023, the company's fully automatic biochemical analyzer AutoChemB801 series was certified; the fully automatic microbial mass spectrometry testing system Autofms series obtained the first European Union IVDR microbial mass spectrometry testing system product registration certificate; the genetic sequencer Sikun 2000 series was launched in the non-clinical field; nucleic acid mass spectrometry registration work is progressing steadily, and mass spectrometry quality control products are being launched, and drug sensitivity kits have entered the pilot phase; the triple quadrupole liquid mass spectrometer system performance testing and inspection machine work has been completed.
Profit forecasting and investment ratings. Considering the implementation of biochemical and luminescence collection policies, we have slightly lowered our 24-25 profit forecast. The net profit for 2024-2025 is estimated to be 15.12/1,828 billion yuan (the previous forecasts were 16.20/1,961 billion yuan, respectively), and the net profit forecast for 26 years was 2,216 billion yuan, corresponding EPS was 2.58/3.12/3.78 yuan, respectively, with reference to the valuations of domestic medical devices and IVD listed companies (2024E Mindray Medical 25 times PE and Yahuilong 27 times PE), The company's 2024 valuation was lower than that of comparable companies. Considering the steady growth of the company's immunization sector, new platforms and new products continued to be launched, and platform-based effects gradually became apparent, so it maintained a “buy” rating.
Risk warning: business promotion falls short of expectations; industry competition intensifies; IVD product policy control.