Regular business growth was steady. Affected by multiple factors, the profit side was phased under pressure. In 2023, the company achieved revenue of 3,667 billion yuan, a year-on-year decrease of 47.87%. Excluding major orders, revenue increased by about 10% year on year; net profit to mother was 267 million yuan, down 86.69% year on year; net profit after deducting non-return to mother was 248 million yuan, down 87.49% year on year. With 2024Q1, the company achieved revenue of 678 million yuan, a year-on-year decrease of 50.81%; net profit to mother - 94.87 million yuan, a year-on-year decrease of 131.20%; net profit not attributable to mother - 93.48 million yuan, a year-on-year decrease of 131.55%. All of the company's large orders in 2023 have been delivered; the company's performance is under phased pressure due to factors such as high deliveries of large orders over the same period, fluctuations in downstream demand, and increased depreciation in new production capacity. Considering the above factors, we lowered the company's 2024-2025 profit forecast and added a 2026 profit forecast. The estimated net profit for 2024-2026 is -0.95/1.11/288 million yuan (originally estimated at 471/595 million yuan), EPS is -0.17/0.20/0.53 yuan, and the current stock price corresponds to PE -98.0/84.1/32.4 times. Given the steady growth rate of the company's regular business and the rapid development of emerging businesses such as CDMO, small molecule formulations, etc., to maintain the “buy” rating .

Small molecule APIs CDMO: Continued expansion of new customers. The number and quality of projects increased steadily in 2023. The company's small molecule API CDMO business achieved revenue of 3.479 billion yuan, down about 50% year on year; the company provided small molecule API CDMO services to about 350 customers around the world and introduced 105 new customers; 655 signed orders (excluding J-STAR), an increase of about 14% year on year; achieved 590 delivery projects, an increase of about 31% year on year. Meanwhile, in 2023, the number of the company's service API products was 181, an increase of about 54 over the previous year; API products achieved revenue of 479 million yuan, an increase of 22% over the previous year. With the gradual diversion of front-end cultivation projects to back-end and continuous transformation to APIs, the small molecule API CDMO business is expected to resume steady growth.

New business capabilities continue to advance and accelerate the global layout

The company's new business capabilities continued to advance. In 2023, the formulation and CGT businesses achieved revenue of 124.53 billion yuan respectively, a year-on-year change of 237%/-85%. Among them, the formulation business provided 112 customers with about 153 formulation project services; newly signed formulation orders amounted to about 225 million yuan, an increase of 89% over the previous year. The CGT business introduced 54 new customers, 83 new projects, and signed new orders of 135 million yuan. At the same time, the company continues to promote a global layout. Production capacity in Minhang, Shanghai, Shanghai, Waigaoqiao, New Jersey, and Slovenia has been put into operation one after another, and new capacity is gradually being implemented.

Risk warning: Order delivery falls short of expectations; market competition intensifies; environmental protection and production safety risks.