The performance was outstanding, and abundant orders provided a guarantee for future performance growth. In 2023, the company achieved operating income of 760 million yuan, an increase of 29.65%; net profit to mother was 135 million yuan, up 86.06% year on year; net profit after deducting non-return to mother was 114 million yuan, up 70.58% year on year; and gross profit margin was 30.41%, up 3.12% year on year. With 2024Q1, the company achieved operating income of 185 million yuan, up 17.42% year on year; net profit due to mother was 22.74 million yuan, down 10.22% year on year; net profit after deducting non-return to mother was 19.57 million yuan, up 7.74% year on year. The company's revenue side is growing steadily, and 2024Q1 is under short-term pressure on the profit side due to reduced government subsidies. In 2023, the company signed a new tax-free contract amount of 1,292 billion yuan, an increase of 23.89% over the previous year; by the end of 2023, the stock amount of tax-free contracts was 1,881 billion yuan, an increase of 24.97% over the previous year. Abundant orders provided a guarantee for the company's future performance growth. Considering fluctuations in downstream demand in the industry, we lowered our 2024-2025 profit forecast and added a 2026 profit forecast. We expect net profit to be 1.55/2.00/259 million yuan for 2024-2026, EPS is 2.54/3.27/4.23 yuan, and the PE corresponding to the current stock price is 18.0/14.0/10.8 times. In view of the steady growth of the company's on-hand orders, it guarantees future performance growth and maintains a “buy” rating.
The number of employees has been growing steadily. It has served many large domestic and foreign pharmaceutical companies. By the end of 2023, the total number of employees in the company was 4,186, an increase of 15.06% over the previous year; the number of professional business personnel exceeded 4,000, which can cover more than 1,300 clinical trial institutions, and the scope of services covers more than 190 cities across the country. The company has cooperated with the top 10 global pharmaceutical/CRO companies, including MSD, Jingding, Roche, etc., to promote the listing of 140 products at home and abroad. SMO's service quality and efficiency are at the leading level of its peers.
Brand influence continues to grow. It has provided SMO services for many popular clinical projects in China. By the end of 2023, the company had undertaken more than 3,000 international and domestic SMO projects and implemented 1,832 SMO projects, including 60 ADC projects, 55 CAR-T projects, and 75 dual antibody projects. The company has promoted the listing of 61 new tumor drugs and 11 tumor biosimilar or chemical generic products at home and abroad, and has participated in SMO services for 20 PD-1/PD-L1 monoclonal antibodies. Its professional service capabilities have been unanimously recognized by domestic and foreign customers.
Risk warning: Drug development falls short of market expectations, loss of core technical members, decline in SMO demand, etc.