Incident Overview

(1) The company announced its 2023 annual report: 23 achieved operating income of 1,366 billion yuan, a year-on-year decrease of 17.68%, realized net profit to mother of -0.33 million yuan, and realized deduction of non-net profit of -58 million yuan.

(2) The company announced its 2024 quarterly report: 24Q1 achieved operating income of 260 million yuan, a year-on-year decrease of 42.51%, realized net profit to mother of -38 million yuan, and realized deduction of non-net profit of -40 million yuan.

Analytical judgment:

Short-term performance is under pressure, and continued international expansion is expected to bring about performance flexibility. The company achieved revenue of 1,366 billion yuan in 23 years, a year-on-year decrease of 17.68%, and achieved revenue of 260 million yuan in 24Q1, a year-on-year decrease of 42.51%. The revenue side is under pressure. We judge that it is mainly affected by falling order prices and delays in execution. The company signed 2.2 billion yuan of new orders in '23, a year-on-year decrease of 36%, including 968 million yuan of new orders for drug discovery and pharmaceutical research, a year-on-year decrease of 25%, and the pre-clinical research business signed new orders of 1,232 billion yuan, a year-on-year decrease of 43%. We judge that this was mainly affected by factors such as the decline in industry sentiment and the unit price of order items. According to the 23 annual report, the company initially completed the construction of an R&D laboratory in Boston, USA in September '23, focusing on meeting the needs of overseas customers and actively expanding international business. Overseas business achieved revenue of 387 million yuan in '23, a year-on-year decrease of 2.59%. The revenue side declined slightly. Looking forward to the future, the company is actively expanding its international business, and overseas business is expected to achieve steady growth. Looking forward to the future, we judge that the short term will continue to be affected by the cooling of domestic and foreign investment and financing environments. In the medium to long term, the company will continue to strengthen technical capacity building and domestic and foreign market business expansion, and it is expected that performance elasticity will gradually return.

Investment advice

Considering changes in the domestic investment and financing environment, the 24-25 profit forecast was adjusted, that is, 2024-2026 revenue was adjusted from 1,718/19.14/NA billion yuan to 12.14/13.19/1,435 billion yuan, and EPS was adjusted from 1.43/1.60/NA yuan to 0.02/0.22/0.57 yuan, corresponding to the closing price of 35.36 yuan/share on April 30, 2024, PE was 1626/163/62 times, respectively, maintaining the “buy” rating.

Risk warning

The company's order demand falls short of expectations, the commissioning of fund-raising projects falls short of expectations, the risk of loss of core technical backbone and management, and the risk of increased competition