Key points of investment
Financial performance: Results were drastically restored month-on-month, and the inflection point has been reached
2024Q1 achieved revenue of 687 million, a year-on-year increase of 0.04% and a month-on-month increase of 51% under high base pressure, reaching the highest point in nearly 5 quarters. Net profit to mother was 138 million yuan, up 0.06% year on year, up 182% month on month; net profit after deducting non-return to mother was 133 million yuan, up 7% year on year, up 251% month on month. The gross profit margin was 49.60%, and the net profit margin after deducting non-return to mother was 20% and 19%, respectively.
Growth: The impact of industry rectification has basically been eliminated. The second growth curve is clearly divided into sectors. The 24Q1 life science sector achieved revenue of 350 million yuan, an increase of 79% over the previous month, the medical innovation sector achieved revenue of 334 million yuan, an increase of 31% over the previous month. New medical infrastructure, public health, and blood/plasma stations continued to recover clearly. Vaccine city networks such as Guizhou and Henan and automated blood station user scenarios in Tibet and Shanghai were gradually realized. With the improvement of the service scenario by the acquired subsidiary Haier Biotech (Suzhou), the medication automation solution broke through the services of high-end users such as Shaw Hospital of Zhejiang University and Zhongshan People's Hospital, bringing new performance and empowerment to the company.
Non-storage: The share of non-storage revenue in 24Q1 reached 39%, up 22% year-on-year and 36% month-on-month. The new pattern of multi-category development was further consolidated, customer value continued to expand, and the second growth curve was clear.
By region, the domestic market achieved revenue of 499 million yuan in Q1, up 11% year on year and 80% month on month. The inflection point is clear. The company's quarterly report shows that overseas markets are still affected by issues such as the execution cycle of project-related businesses, and revenue declined year-on-year. We believe that with the gradual transformation of the backlog of projects, overseas markets are expected to show stronger growth.
Profitability: Gross margin fluctuated slightly, net margin significantly fixed 24Q1 gross profit margin of 49.60% month-on-month, and remained stable year-over-year, with slight fluctuations. The net profit margin and non-return net profit margin were 20% and 19%, respectively, up 9 pcts and 11 pcts from month to month, respectively. 24Q1 has begun to verify our judgment on the company's profitability in the 23 annual report reviews: “As the impact of industry restructuring gradually subsides and the domestic market sentiment recovers, the net interest rate is expected to gradually return to about 20% in 2024.”? Balance sheet: Affected by changes in business structure, accounts receivable increased markedly in 2024Q1, net operating cash flow of 77.2 million, a year-on-year decrease of 27.34%. It was mainly affected by the year-on-year increase in the value of changes in accounts receivable of 92.21 million. We found that since the company acquired Suzhou Houhong, the number of accounts receivable turnover days has increased markedly, reaching 34.22 days in 24Q1. Referring to the number of accounts receivable days (390 days of accounts receivable turnover as of 23.09.30) and repayment rhythm, we believe that the extension of the company's accounts receivable turnover days was mainly due to continuous extension of service capacity and changes in revenue structure, and Q1 was the highest point for the whole year. In the future, as the share of revenue from non-storage businesses increases, there may still be some fluctuations.
Profit forecasting and valuation
Referring to the company's historical revenue confirmation pace and the unexpected fulfillment of 24Q1 results, we raised the company's net profit to mother for 2024-2026 to $598 million, $733 million and $893 million, respectively, and EPS to 1.88, 2.31, and 2.81 yuan/share, respectively, corresponding to the closing price on April 25, 2024, about 18 times PE in 2024. As the share of the company's non-storage business continues to rise, the second growth curve gradually becomes clear, which is expected to usher in valuation reshaping. Maintain an “gain” rating based on comparable company valuations and industry positions.
Risk warning
Risk of business development falling short of expectations; increased risk of market competition; risk of overseas geopolitical risk; risk of merger and acquisition company integration falling short of expectations.