Event: The company achieved operating income of 11.538 billion yuan (+12.4%) and net profit of 1.01 billion yuan (+16.5%) to mother in 2023. 2024Q1 achieved operating income of 2,671 billion yuan (-1.95%) and net profit of 231 million yuan (-33.8%). Despite fluctuations in performance, the company's global customer inquiries and visits picked up compared to the same period in 2023. The amount of new orders signed by 24Q1 increased by more than 20% year-on-year, providing a stable source for subsequent performance growth.
Continue to strengthen the construction of integrated platforms, mature businesses are growing rapidly, and new businesses can be expected in the future. Looking at the 23-year results by business: 1) Laboratory services achieved revenue of 6.66 billion yuan (+9.4%), of which the bioscience sector grew strongly, accounting for more than 51% of the laboratory services sector's revenue. 2) CMC services achieved revenue of 2,711 billion yuan (+12.6%). The number of process verification and commercialization stage projects has reached 29. It is expected that the revenue share of post-clinical projects will increase rapidly in the future, driving the company's performance to the next level. 3) Clinical research services achieved revenue of 1,737 billion yuan (+24.7%). Due to the remarkable results of the integrated platform, customer recognition and market share increased rapidly, and gross margin increased 5.59 percentage points over the same period last year. 4) Macromolecule and cell and gene therapy services achieved revenue of 425 million yuan (+21.1%). Kanglong Biotech's capital amount is 950 million yuan, and the post-investment valuation is about 8.55 billion yuan. The pipeline funnel for emerging businesses has begun to take shape. In the future, as the project is pushed to a later stage, the scale of revenue and operational efficiency are expected to gradually increase.
The full-process, integrated, and international service platform shows strong resilience, and repurchases show confidence in long-term development. The company added more than 800 new customers in '23, accounting for 7.44% of the company's revenue. Looking at the customer distribution area, customer revenue in Europe and North America increased by 24.4% and 11.4% respectively in '23, injecting strong impetus into the company's steady growth. Judging from the production capacity layout, the US Internal Toxicology Research Center will be put into operation this year, and the Ningbo Macromolecule CDMO platform will be partially put into use this year. We believe that under the full-process, integrated and internationalized platform model, the company can better empower the pharmaceutical innovation needs of global customers and ensure long-term steady growth in performance. In addition, the company announced a plan to repurchase A-shares, with a total capital of 2-3 billion yuan. The number of shares repurchased accounts for about 0.36% to 0.54% of the company's total issued share capital.
According to the 23 annual report, revenue was lowered and the cost rate level was raised. The company's EPS for 2024-25 was 1.02/1.15 yuan (the original forecast value was 1.46/1.92 yuan), and the additional EPS for 26 years was 1.34 yuan. According to comparable companies, the current reasonable valuation level of the company is 19 times the price-earnings ratio of 2024, and the corresponding target price is 19.38 yuan, maintaining an increase in holdings rating.
Risk warning
Risk of declining demand for pharmaceutical R&D services, risk of increased industry competition, risk of exchange rate fluctuations, etc.