Incidents:
On April 20, 2024, Jet Biotech released its 2023 annual report: in 2023, it achieved operating income of 463 million yuan, a year-on-year decrease of 24.06%; realized net profit of 0.35 million yuan, a year-on-year decrease of 60.34%; realized net profit after deduction of 32 million yuan, a year-on-year decrease of 57.90%; gross sales margin of 30.62%, a year-on-year decrease of 1.22 pcts; at the end of 2023, the company's inventory amount was 84 million yuan. The year-on-year decrease was 32.31%; the company's net cash flow from operating activities in 2023 was 135 million yuan, a year-on-year decrease of 18.88%.
In a single quarter of 2023Q4, the company achieved operating income of 133 million yuan, +3.03% YoY, +0.34%; realized net profit of 221 million yuan, +885.76% YoY, +89.35% month-on-month; net profit after deduction of 0.2 billion yuan, +560.20% YoY, +128.07% month-on-month; gross sales margin was 38.69%, +12.83 pcts YoY, +6.95 pcts month-on-month; net sales margin was 15.70%, +14.08 pcts, month-on-month + 7.35 pcts; at the end of the 2023Q4 quarter, the company's inventory amount was 84 million yuan, -32.31% year on month, -3.30% month on month; net cash flow from operating activities was 59 million yuan, +107.49% year on year, +143.30% month on month.
Investment highlights:
Demand in overseas markets recovered slowly, and the company's performance declined
It is affected by factors such as price games within the industry, downstream inventory digestion, and slow recovery in foreign market demand. In 2023, the company achieved revenue of 463 million yuan, a year-on-year decrease of 24.06%. By product sector, the liquid treatment sector achieved revenue of 274 million yuan, gross margin of 30.23%, year-on-year -0.02 pcts, sales volume of 850 million units, 4.8.55% year-on-year, average price 0.32 yuan/unit, +29.23% year-on-year; the biological culture sector achieved revenue of 157 million yuan, -2.63%, gross margin of 39.08%, year-on-year, -5.46 pcts, sales volume of 100 million units, year-on-year +5.90%, average price 1.51 yuan/unit, year-on-year ratio -8.06% ; Instruments, equipment and other categories achieved revenue of 0.18 million yuan, or -39.83% year-on-year, gross margin of -4.47%, +6.29 pcts year-on-year.
In 2023, the company's net profit to the mother was 0.35 million yuan, a year-on-year decrease of 60.34%, mainly due to a decrease in the company's sales of life science consumables products in 2023 and an increase in related fixed costs such as depreciation and interest. The company's sales expenses rate in 2023 was 6.52%, +2.39 pcts year on year, mainly due to the increase in the company's sales labor, business promotion expenses and travel expenses; the management expense ratio was 6.08%, +0.94 pcts year over year; the R&D expenses rate was 6.16%, +0.03 pcts year over year, mainly due to the company's recovery of equity incentive costs; and the financial expense ratio was 1.10%, +2.28 pcts year on year, mainly due to the increase in interest expenses confirmed by the company on convertible bonds issued abroad. At the end of 2023, the company's inventory value was 84 million yuan, a year-on-year decrease of 32.31%, mainly due to a decrease in the company's raw materials. The company's net cash flow from operations and production in 2023 was 135 million yuan, a year-on-year decrease of 18.88%, mainly due to a decrease in payment received by the company.
Actively promote the implementation of fund-raising projects, and continue to improve core technology. The company is mainly engaged in R&D, production and sales of life science consumables for cell culture and liquid treatment. Facing an environment where the global economic cycle is declining, domestic economic recovery is slow, and domestic and foreign life science consumables market demand is declining. In 2023, the company will continue to increase product research and development and optimize promotion services. In 2023, some of the company's convertible bond-raising project plants and intelligent warehousing main buildings have been completed and inspected, and some three-dimensional warehouses have already been put into use. At the same time, the company continues to increase investment in R&D, actively layout new product development and industrialization in fields such as cell therapy, biomedicine, infectious disease detection and protection, vaccine research and development, and continuously improve automated manufacturing capabilities. By the end of 2023, the company had obtained 217 authorized patents, including 34 invention patents and 103 utility models.
Strengthen independent brand building and expand the layout of medical consumables and equipment. China's life science research and related industries started late. Domestic life science service companies are mainly small and medium-sized enterprises, and the vast majority of the scientific consumables market relies on imports. With the improvement of the quality of domestic brand products, the localization rate in the field of scientific consumables is increasing year by year. The company is a leading domestic life science consumables company. Compared with similar products from international brands, there is not much difference in the company's product performance indicators. In 2023, the company stepped up its domestic and foreign market development efforts and continuously raised its brand awareness. The company has set up a subsidiary in the US for initial deployment, and plans to use Germany as CITIC to promote its own brand in Europe. By the end of 2023, the company had established 12 offices in China, which basically covered the core regions of the country. At the same time, based on its core strengths in cell culture and life science consumables, the company plans to expand into the medical consumables and medical equipment industry in the direction of IVF and cell therapy.
Profit forecasts and investment ratings estimate that the company's 2024-2026 revenue will be $523, 6.30, and 811 million yuan, respectively, and net profit to mother of 0.48, 0.65, and 84 million yuan, respectively, corresponding to PE 30.51, 22.66, and 17.49 times, respectively. As a leading domestic life science consumables company, the company has a first-mover advantage among domestic brands. As the localization rate increases year by year, the company is expected to increase its market share year by year, grow rapidly, and achieve import substitution. First coverage, giving a “buy” rating.
Risks suggest that market development falls short of expectations; risk of raw material price fluctuations; new product development falls short of expectations; industry competition pattern deteriorates; risk of falling product prices; domestic substitution process falls short of expectations; risk of exchange rate fluctuations.