The company released its 2023 annual report and 2024 quarterly report: in 2023, it achieved revenue of 544 million yuan, net profit to mother of 154 million yuan, and net profit of non-return to mother of 140 million yuan, up 14.6%, and -23.4%, respectively.
Among them, the fourth quarter achieved revenue of 131 million yuan, net profit of 0.25 million yuan, and net profit of non-return to mother of 0.16 million yuan, with year-on-year increases of 7.6%, -33.0%, and -49.3%, respectively. 2024Q1 achieved revenue of 146 million yuan, net profit of 31 million yuan, and net profit of 30 million yuan after deducting non-return to mother, with year-on-year increases of 6.7%, -31.9%, and -32.1%, respectively.
Regular business maintained relatively rapid growth, and the mismatch between expenses and revenue growth put temporary pressure on profit margins.
Regular business revenue growth is in line with expectations: in 2023, revenue from specific acute respiratory infectious disease-related products was 499 million yuan, up 29.5% year on year, of which domestic revenue was 169 million yuan, up 16.8% year on year, and overseas revenue was 330 million yuan, up 37.1% year on year. 2024Q1's regular revenue was $138 million, up 16.0% year over year.
Profits are under short-term pressure: The 2023 sales/management expense ratio was 30.83%/15.51%, respectively. Compared with 2022, the 2024Q1 sales and R&D expense ratio increased further due to the decline in revenue growth and the increase in overseas investment. At the same time, the 2024Q1 profit margin was also affected by the exchange earnings base in the first half of 2023, which is expected to gradually stabilize after short-term pain.
Continued deepening of the global layout: The company has established a brand foundation overseas, and by setting up overseas subsidiaries, it gradually favors direct sales from distribution, and its market share continues to increase. In the context of overseas life science tool companies such as Thermo Fisher generally facing negative growth pressure in 2023, after deducting products related to specific acute respiratory infectious diseases, the company's revenue in the US, Europe and the Asia-Pacific region reached 229/0.72/029 million yuan respectively in 2023, up 29.78%/69.51%/33.35%, respectively, and the overall overseas share reached 66.11% (further increase from 62.44% in 2022).
Deepen the clinical business layout and improve the product system. In the 2020-2022 domestic substitution window brought about by supply chain stability issues, the company seized the opportunity and rapidly increased its market share in newly opened pipelines. Currently, the company's hand pipeline is mainly concentrated in the pre-clinical or early clinical stages. In order to take on future projects to greater post-clinical market opportunities, the company is strengthening the clinical product layout, such as GMP grade cytokines, cell-activated antibodies and magnetic beads, omnipotent nucleases, and Cas enzymes. As the Suzhou GMP plant is put into operation in the second half of the year, the company's GMP grade biological reagent opening and production capacity will be further enhanced.
Investment advice and profit forecasting. We are optimistic that the company is a leader in recombinant protein reagents in China, and that global competitiveness will gradually increase. Considering that the company is still growing and that the cost investment will affect short-term profits to a certain extent in the context of a slight decline in revenue growth, it is estimated that in 2024-2026, the net profit to the mother will be 1.62/2.01/250 billion, corresponding to PE of 28/22/18 times, respectively, maintaining a “highly recommended” rating.
Risk warning: Risks such as demand recovery falling short of expectations, fluctuating cost rates, increased competition, and exchange rates.