Incident: Novo Zhiyuan announced the 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved operating income of 2.02 billion yuan (+3.97% YoY), achieved net profit of 178 million yuan (YoY +0.47%), and realized net profit of 140 million yuan after deduction (-8.92% YoY). With 2024Q1, the company achieved operating income of 468 million yuan (+6.32% YoY), realized net profit of 27.32 million yuan (+21.40% YoY), and realized net profit of 21.28 million yuan after deduction (+6.85% YoY).
Domestic business was under pressure in the short term, and overseas business performance was steady. Looking at the company's business by region, in 2023, mainland China achieved revenue of 1,012 million yuan (-9.43% YoY), Hong Kong, Macao, Taiwan and overseas regions achieved revenue of 985 million yuan (+22.06% YoY). Domestic business was under pressure in the short term, and overseas business continued to grow well.
A number of new sequencing platforms have been introduced, and service capabilities have been continuously improved. The company introduced a number of Illumina next-generation sequencing systems Novaseq X Plus, Huada sequencing platform DNBSEQ-T7, and PacBio large-scale sequencing platform Revio to comprehensively cover the latest sequencing needs of customers, and continuously improve sequencing throughput and service capabilities. In 2023, the company's sequencing data production and sales increased by 43.89% and 41.38%, respectively.
The company is steadily advancing the global localization development strategy, and the global regional service capacity is constantly being strengthened. The company adheres to a global localization development strategy. According to the 2023 report, with the successive use of German and Japanese laboratories, the company has deployed laboratories around the world, including China, the United States, the United Kingdom, Singapore, Germany, and Japan. With a globally consistent high-standard laboratory management and operation system, the company has deployed local staff, and continuously strengthened its global regional service capabilities to provide customers around the world with more efficient and stable products and services.
Profit forecast and investment suggestions: As a leading global service provider for scientific research and gene sequencing, the company adheres to the “global localization” development strategy while continuously improving the service capabilities of the sequencing platform and consolidating its leading position in the industry through internal and external efforts. With the completion of sequencing platform updates and the gradual implementation of production capacity in newly built laboratories, we believe that the company's performance growth is expected to return to the fast track. We are optimistic about the long-term development of the company. We expect the company's revenue in 2024-2026 to be 22.51/25.95/3.113 billion yuan, up 12.4%/15.3%/20.0% year on year, net profit to mother of 2.05/2.40/ 284 million yuan, up 15.2%/16.9%/18.6% year on year, EPS 0.49/0.58/0.68, corresponding to 2024-2026 PE 27/23/20 times, respectively, maintaining the “buy” rating.
Risk warning: Downstream sequencing demand fluctuation risk, geopolitical risk, risk of declining gross margin due to supplier price increases.