Performance is under phased pressure, and on-hand orders are growing steadily

With 2024Q1, the company achieved operating income of 1,660 million yuan, a year-on-year decrease of 8.00%; net profit to mother was 235 million yuan, a year-on-year decrease of 58.65%; net profit after deducting non-return to mother was 305 million yuan, a year-on-year decrease of 20.50%. The phased pressure on performance is mainly due to a decline in COVID-19 business and fluctuations in downstream market demand. As of the end of 2023, the total amount of contracts to be executed was 14.08 billion yuan, an increase of 2.1% over the previous year, providing a guarantee for a steady increase in performance in 2024. We are optimistic about the long-term development of the company and maintain the original profit forecast. The net profit for 2024-2026 is 22.40/24.91/28.19 billion yuan, corresponding EPS is 2.57/2.85/3.23 yuan, and the current stock price corresponds to PE 22.5/20.2/17.9 times. Considering the company's strong competitiveness as a leading domestic clinical CRO, the steady development of the digital statistics and SMO business, and maintaining the “buy” rating.

Clinical trial technical services have developed steadily as a whole, and clinical trial technical services have been vigorously expanded to achieve revenue of 4.168 billion yuan in 2023, an increase of 1.04% over the previous year. By the end of December 2023, the company's ongoing pharmaceutical clinical research projects reached 752, an increase of 72 over the previous year; of these, 499 domestic projects, 194 single overseas projects, and 59 MRCT projects, the company's clinical trial technical service capabilities have gradually been recognized by customers at home and abroad. At the same time, the company vigorously developed emerging businesses such as medical device clinical research, pharmacovigilance, medical translation, etc., and enhanced global service capabilities after integration with the European Marti Farm pharmacovigilance team. The real-world research team helped Sanofi's Isatuximab monoclonal antibody domestic BLA application.

The digital system business and SMO business are developing steadily, and integrated service capabilities continue to enhance clinical trial-related services and laboratory services in 2023 to achieve revenue of 3.121 billion yuan, an increase of 8.51% over the previous year.

Both the digital system business and the SMO business have developed steadily. By the end of 2023, the number of global customers in the digital system business reached 340, an increase of 31.27% over the previous year; the number of SMO projects increased from 1,621 at the end of 2022 to 1,952, providing SMO services for 50 new Class I drugs that have been approved in China; the number of active laboratory service projects was 4,411, and Fangda Pharmaceutical US Laboratories has completed the acquisition of Nucro-Technics and its subsidiaries.

Risk warning: Risks such as changes in pharmaceutical regulatory policies, exchange rate fluctuations, and declining market demand for drug research and development services.