Incidents:
The company recently released its 2023 and 2024Q1 performance reports. In 2023, the company achieved revenue of 760 million yuan (+29.65%), net profit attributable to mother was 135 million yuan (+86.06%), and net profit after deducting non-return to mother was 114 million yuan (+70.58%). In 2024, Q1 achieved revenue of 184 million yuan (+17.24%), net profit attributable to mother of 22.7372 million yuan (-10.22%), and net profit of 19.5701 million yuan (+7.74%) after deducting non-return to mother net profit.
Comment: The project reached a new high, and the recruitment of personnel increased. By the end of 2023, more than 3,000 SMO projects had been implemented, including 60 ADC projects, 55 CAR-T projects, and 75 dual-antibody projects. In the field of oncology, as of December 2023, the company has promoted the listing of 61 new oncology drugs and 11 tumor biosimilar or chemical generic products at home and abroad. The company participated in clinical trial site management services for 20 PD-1/PD-L1 monoclonal antibody new drug products, including the first PD-1 monoclonal antibody new drug product marketed in China. SMO is a talent-intensive industry. Talent is an important core competitiveness of the company, and the company continues to strengthen talent and organizational capacity building. After listing, the company complements and improves the existing remuneration and incentive system by implementing equity incentives, stabilizes the core team, fully mobilizes the enthusiasm and creativity of the company's relevant managers and cadres, and at the same time attracts external talents to promote the long-term, sustainable and healthy development of the company. The number of employees in the company for 2021/2022/2023/2024Q1 was 3343/3638/4186/4407, respectively. We believe that the rapid increase in the number of employees will effectively support the company's increasing number of projects.
New orders are growing rapidly, and profitability continues to improve. The company takes business development as the engine, agile innovation, customer-oriented, increases business development and brand promotion, and further consolidates business cooperation with high-quality and diverse customer groups. Orders were obtained through years of project experience accumulated in the industry, professional brands, and word-of-mouth communication among customers. 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 contract amount without tax 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. We believe that the rapid increase in company orders is mainly due to factors such as global pharmaceutical companies continuing to increase investment in R&D and increased demand for SMO services for clinical trials of new drugs by domestic and foreign pharmaceutical companies. As China's drug regulatory authorities reach a new level of drug quality management and the difficulty of developing new drugs continues to increase, the penetration rate of SMO services in clinical pharmaceutical research and development is expected to increase further.
Profit forecast and investment advice: We expect the company's revenue from 2024 to 2026 to be 901 million, 1,067 million, and 1.269 billion, with year-on-year growth rates of 18.50%, 18.50%, and 18.90%; net profit to mother of 158 million, 188 million, and 233 million, with year-on-year growth rates of 16.97%, 19.26%, and 18.76%. In view of the company's ability to deliver good results, we maintain the company rating and give the company a “buy” rating.
Risk warning: Risk of increased competition, risk of technology iteration, policy risk.