Core views
Bepsyth released its annual report for the year 23 and the quarterly report for the year 24. The company's business continued to grow steadily. The annual revenue of the regular business reached 498 million yuan in '23, an increase of 29% over the previous year. The global layout has always been an important strategy for the company. The focus was on overseas markets in '23, and the annual revenue growth of overseas conventional business was close to 40%. Among them, the European region's revenue growth of more than 69% was the most significant. The company's product richness continues to increase, with SKU growth of 41% in 23 years. We believe that the company will continue to deepen its global layout strategy in the future, and with the gradual recovery of domestic and foreign biomedical investment and financing, the company's performance is expected to continue to grow.
occurrences
1. Bipsyth released its 2023 annual report. The company's annual revenue was 544 million yuan, an increase of 14.59% over the previous year. Net profit attributable to mother was 154 million yuan, a year-on-year decrease of 24.61%; after deducting non-net profit of 140 million yuan, a year-on-year decrease of 23.42%.
2. The company released its performance report for the first quarter of '24. The company's Q1 revenue was 146 million yuan, an increase of 6.67% over the previous year. Net profit attributable to mother was RMB 30.67 million, a year-on-year decrease of 31.91%; after deducting non-net profit of RMB 30.28 million, a year-on-year decrease of 32.12%.
Brief review
Revenue is in line with market expectations, and profit side is under pressure in the short term
In 2023, the company's annual revenue was 544 million yuan, up 14.59% year-on-year. After deducting products related to specific acute respiratory infectious diseases, revenue reached 498 million yuan, up 29.35% year on year; of these, revenue from China was 169 million yuan, up 16.79% year on year, and overseas revenue was 330 million yuan, up 37.08% year on year.
Net profit attributable to mother was 154 million yuan, a year-on-year decrease of 24.61%; after deducting non-net profit of 140 million yuan, a year-on-year decrease of 23.42%.
The company's Q1 revenue in 2014 was 146 million yuan, up 6.67% year on year. Of these, sales revenue after deducting products related to specific acute respiratory infectious diseases reached 138 million yuan, an increase of 16.00% year on year. Net profit attributable to mother was RMB 30.67 million, a year-on-year decrease of 31.91%; after deducting non-net profit of RMB 30.28 million, a year-on-year decrease of 32.12%. Net profit attributable to mother and net profit deducted from the same period last year, mainly due to the decline in revenue growth in the first quarter, the company strengthened its overseas market layout and increased investment in R&D. The benefits were not yet reflected in the short term.
Strengthen the global layout and increase the share of revenue in America and Europe
The global layout has always been the core of the company's future development. In the past two years, the company has focused on overseas markets. Overseas revenue after deducting specific acute respiratory infectious disease-related products in '23 was 330 million yuan, accounting for 66.11% of the company's total annual revenue after deducting products related to specific acute respiratory infectious diseases. Currently, the existing sales channels have covered Asia Pacific, North America, Europe and other regions. At the same time, the company established a number of overseas subsidiaries in Europe, Japan and other places last year to further explore the international market, develop terminal customers such as international pharmaceutical companies, biotechnology companies, research institutes, etc., and expand the company's sales channels. In 2023, the company's revenue increased by more than 35% year-on-year after deducting products related to specific acute respiratory infectious diseases overseas.
Along with the advancement of the downstream customer pipeline, the revenue share of a single major product increased, and the company increased category coverage in a timely manner according to market and customer needs. At the same time, it further increased application development, enriched application testing data, and broadened product application scenarios. Currently, the company has 4,500 products, including more than 3,400 recombinant proteins. In 2024, the company will step up new product development efforts, covering cell therapy, immune checkpoints, enzyme products, cytokines, infectious disease-related proteins, antibodies, magnetic beads and kit products to meet the R&D and production needs of different customers. The proportion of products and orders of 500,000 yuan to 1 million yuan and more than 1 million yuan increased markedly in 23 years, reflecting the further deepening of cooperation between the company and major customers.
Annual outlook: Deepening global layout and building a new business growth engine The company is positioned as a global brand biological reagent company, focusing on providing products and solutions for all stages of global biomedical R&D, production and clinical application. It is expected that this year the company will continue to increase investment in overseas R&D, actively introduce and train high-end R&D talents, and build an internationally competitive R&D team. The company plans to establish overseas production bases, enhance supply capacity in many countries and regions around the world, and strengthen supply chain advantages. We believe that with the gradual recovery of overseas investment and financing, the company's share of overseas revenue will further increase.
In terms of products, the company is ahead of schedule in emerging fields such as cell and gene therapy. On the basis of having a GMP quality management system platform, the company has successfully developed nearly 30 high-quality GMP grade products, such as IL-2, IL-7, IL-15, etc. It is expected that with the rapid development of the cell and gene therapy industry, the company's GMP grade cytokine revenue will continue to increase.
Financial indicators analysis: The scale of operations expanded, expenses increased in stages, and the gross profit margin for the full year of 2023 was 91.26%, down 1.05 percentage points from the full year of '22. The cost rate for the full year of '23 increased rapidly, with sales expenses of 168 million yuan, an increase of 49.19% over the same period last year; the sales expense ratio was 30.83%, an increase of 7.15 percentage points over the same period last year. The increase in expenses was mainly due to sales staff labor costs as the scale of the business expanded and market expenses increased; of these, there were 199 sales personnel, an increase of 51.91% year on year. Management expenses were 84.32 million yuan, up 17.95% year on year, and the management fee ratio was 15.51%, an increase of 0.44 percentage points over '22. R&D expenses were 125 million yuan, up 9.72% year on year, and the R&D cost ratio was 22.98%, down 1.02 percentage points from '22, mainly due to increased R&D personnel remuneration, R&D material costs and new product R&D investment costs. By the end of 2023, the number of R&D personnel in the company had reached 247, accounting for 31.83% of the total number of employees, an increase of 30.69% year on year; financial expenses - 62.65 million yuan, a decrease of 17.15% from '22.
Profit forecasts and investment advice
Baipsis is one of the leading companies in the domestic recombinant protein reagent industry. We expect the company's revenue to be 624 million yuan, 741 million yuan, and 893 million yuan in 2024-2026, and net profit to mother of 162 million yuan, 196 million yuan, and 242 million yuan respectively. The corresponding growth rates are 5%, 21%, and 34%, corresponding to PE 29, 24, and 20 times, respectively, to maintain a “buy” rating.
Risk analysis
Risk of import substitution falling short of expectations. The international logistics supply chain has been greatly affected in the past few years. The revenue growth rate of domestic reagent companies represented by Bepsis is significantly higher than the average growth rate of importers and the industry, indicating that the localization rate is gradually increasing, and the market share of domestic brands within the industry will gradually increase. However, with the gradual recovery of overseas supply chains, the domestic substitution trend in the field of upstream recombinant protein reagents may be impacted by the recovery in the supply of imported reagents.
Unpredictable risks in overseas markets: Overseas accounts for a relatively high share of the company's current revenue. Future changes in the international situation may affect the company's acquisition of overseas orders, which in turn will affect the company's performance.
The risk of increased competition in the biological reagent industry. In the field of recombinant protein reagents, the domestic market is occupied by imported manufacturers, and the market share of domestic enterprises is low.
If domestic enterprises fail to improve their R&D capabilities and product quality, the company will face an unfavorable competitive situation in the industry, which in turn will lead to a decline in performance.