Incident: Prius publishes its 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved revenue of 760 million yuan (+29.65% YoY), net profit of 135 million yuan (YoY +86.06%), net profit of 114 million yuan (YoY +70.58%); 2024Q1 achieved revenue of 185 million yuan (+17.42% YoY), net profit to mother of 0.23 million yuan (-10.22% YoY), net profit of 20 million yuan (YoY +7.74%).
Comment:
The main business continues to advance steadily, and its service capabilities are widely recognized. In 2023, the company's main business - SMO business revenue reached 760 million (+29.65% year over year), executed 1,832 projects, undertook more than 3,000 domestic and international SMO projects, had rich project experience in various disease fields, participated in 7 customer nuclear drug projects, 60 ADC projects, 55 CAR-T projects, 8 oncolytic virus projects, etc., and its service capabilities were widely recognized. The company has a high number of projects and participation rates in some disease fields. From 2018 to 2023, it participated in 19 new hematologic tumor drug projects (accounting for 36.54%), 14 new thoracic tumor drug projects (accounting for 29.79%), and 6 new breast cancer drug projects (accounting for 27.27%). As of December 2023, the company participated in 11 new PD-1/PD-L1 monoclonal antibody drug projects (accounting for 61.11%) and 14 clinical-stage I drug reagent projects (accounting for 41.18%).
Internal management has been strengthened, and increased efficiency drives profit margin growth. In terms of profit margin, in 2023, we achieved a comprehensive gross profit margin of 30.41% (+3.12pp), net profit margin of 17.73% (YoY +5.37pp), and a net interest rate of 15.02% (YoY +3.60 pp). The company continued to upgrade its information system to improve employee output value management, improve project execution efficiency, and drive profit margin growth. 2024Q1, the company's comprehensive gross profit margin was 25.33% (YoY +0.75pp), net profit margin 12.32% (YoY -3.79pp), and net interest rate of 10.61% (YoY -0.95 pp) after deducting the amount of government subsidies. In terms of cost ratio, the company's expense ratio for the 2023 period was 10.25% (YoY -2.64pp), with sales/management/R&D/finance expense ratios of 1.12% (YoY +0.15pp)/5.50% (YoY -2.04pp)/4.57% (YoY -0.93pp)/-0.94% (YoY +0.17pp), respectively.
Business coverage continues to increase, and new orders continue to grow. In Q1 2024, the total number of people in the company was 4,407, including more than 4,200 CRCs; it has served more than 930 clinical trial institutions, covering more than 190 cities across the country. Benefiting from continued growth in coverage and excellent service capabilities, the company signed new orders in 2023 (excluding tax) of 1,292 billion yuan (+23.89% year over year) and current orders (excluding tax) of 1,881 billion yuan (+24.97% year over year).
Profit forecast: We expect the company's revenue for 2024-2026 to be 988/12.84/1,670 million yuan, up 30.0%/30.0% year on year; net profit to mother will be 1.69/2.24/295 million yuan respectively, up 25.5%/32.5%/31.6% year on year, corresponding to 2024-2026 PE 17/12/9 times, respectively.
Risk factors: Risks such as increased competition in the industry, declining demand for R&D investment and outsourcing, policy risks, and new business development falling short of expectations.