23 years of industry competition have put pressure on the company's performance. In 2023, the company achieved revenue of 1,366 billion yuan (-17.68%); net profit to mother of 0.33 million yuan (-109.82%); net profit after deduction of non-return to mother of 0.58 billion yuan (-118.76%), mainly due to increased competition in the pharmaceutical industry, falling order prices, and delays in execution of some orders. The sales/management/R&D/finance expense ratios for the period were 5.83%/10.41%/8.96%/0.34%, respectively. Revenue for Q1-Q4 in 2023 was $4.51/4.21/311/182 million, respectively, and net profit to mother was $1.02/0.65 /-0.51 /- 148 million yuan, respectively.

The business sector is under pressure, and the Sino-US Double Report GLP highlights its differentiated advantages. In terms of business segmentation, the preclinical research business achieved revenue of 734 million yuan (-20.55%) and a gross profit margin of 30.53% (-16.50pcts) in 2023. New orders of 1,232 billion yuan were signed during the period, with a total of 934 R&D personnel in the preclinical research sector. In 23 years, the drug discovery and pharmaceutical research business achieved revenue of 632 million yuan (-14.07%), a gross profit margin of 15.92% (-17.03pcts), and signed new orders of 968 million yuan. The company simultaneously deployed 1,301 R&D personnel in the drug discovery and pharmaceutical research sector according to business requirements. In 2023, the company's GLP laboratory area was expanded, and the scope of GLP services was increased to 9. 75 NMPAs and generic drugs involved in R&D have been approved for clinical trials, and 16 FDA have been approved for clinical trials. In '23, the company's revenue from the China-US double reporting standard project was 408 million yuan, accounting for 29.87% of the main business revenue.

Pre-clinical integrated business development, multi-point layout in core overseas industries, enhancing comprehensive capabilities. The company's integrated advantage extends from chemical medicine to the field of biopharmaceuticals, and has initiated the construction of a biopharmaceutical discovery technology platform for antibodies, nanoantibodies, ADC, nucleic acid drugs, etc. In September 2023, the R&D center in Boston, USA was initially completed and put into use, helping the company increase its R&D capabilities and provide effective support for the business development of international customers.

Profit forecast and rating: The company's revenue for 2024-2026 is estimated to be 1,453,1,598/1,806 million yuan, up 6.4%/10.0%/13.0% year-on-year; net profit to mother is 0.55/ 1.42/190 million yuan, respectively.

Maintain an “increase in holdings” rating.

Risk warning: industry competition intensifies, uncertainty in the international environment intensifies, overseas business development falls short of expectations