Incident Overview
In April 2024, Nanowei Technology released its 2023 annual report and 2024 quarterly report: the company achieved operating income of 587 million yuan in 2023, a year-on-year decrease of 16.86%; net profit to mother of 69 million yuan, a year-on-year decrease of 75.08%. After excluding the effects of two factors such as amortization of share payments and investment income from the acquisition of Spectrum instruments in the same period last year, net profit to the mother fell 41.90% year on year.
The 1Q24 company achieved operating income of 154 million yuan, an increase of 16.64% year on year; net profit to mother was 0.17 million yuan, up 36.66% year on year, with impressive profit side performance. Excluding the influencing factors of Fuli Instruments and caliber, 1Q24's revenue increased 6.1% year-on-year.
Incident reviews
The number of strategic customers increased significantly, and the scale of application projects continued to accumulate
Actively expand leading key customers and reap rich results. In 2023, the company built new off-site application laboratories in Beijing, Guangzhou, etc., and signed strategic cooperation agreements with important customers such as Zhaobian, Kangfang Pharmaceutical, Jinsai Pharmaceutical, Kingsley, Gan Li Pharmaceutical, Dongyao Pharmaceutical, Tianjing Biotech, Zhixiang Jintai, Pelidot, and Kunpeng Biotech. In 2023, sales from contracted strategic customers were approximately 170 million yuan, accounting for about 42% of the revenue from the chromatographic filler business, a significant increase over the previous year. In 2024, the company will continue to comprehensively deepen strategic customer partnerships and strive to add more than 5 strategic customers for innovative drugs throughout the year. Sales from strategic customers account for more than 50% of the total business revenue of chromatographic fillers.
In terms of customer application projects, 1) In 2023, the company's sales revenue for chromatography media used in four types of macromolecular drug projects, including antibodies (including ADC), recombinant proteins, vaccines, and nucleic acid drugs, was about 250 million yuan (a year-on-year decrease of 14.4%). Affected by adjustments in the biomedical industry, demand for new R&D projects decreased markedly, and 14 new phase III antibody projects were introduced in 2023. 2) The achieved sales revenue of chromatographic filler products used in four types of small to medium molecule drug projects including insulin, peptides, antibiotics, and contrast agents was about 142 million yuan (up 26.5% year on year), of which sales revenue of chromatographic fillers was about 67 million yuan (up 96.4% year on year).
Complete the Fuli Instruments merger and continue to deepen business collaboration
The company started and registered Fuli Instruments in March 2024, and achieved operating revenue of 138.764 million yuan in March.
After the merger, Fuli Instruments will cover the company's product line from chromatographic fillers/chromatography media, chromatographic columns to analytical instruments. At the same time, it will also further develop its synergy with Fuli Instruments in technology research and development, marketing and customer development to achieve “1+1>2” healthy development.
Strengthen international market expansion efforts and look forward to overseas business growth
The company will actively expand overseas markets. In 2024, it will aim to complete the construction and operation of two overseas application laboratories in North America and India, effectively support the company's overseas business layout, and strive to achieve the business target of 100% year-on-year growth in international business. At present, the company has completed the FDA DMF filing of 4 products, which will help many biopharmaceutical projects achieve double reporting between China and the US.
Investment advice
We expect the company's revenue from 2024 to 2026 to be 935/11.61 billion yuan, respectively; the year-on-year growth rate will be 59.4%/24.2%/12.8%; net profit to mother will be 1.54/2.56/317 million yuan, respectively; and the net profit will grow 123.9%/66.6%/24.1% year on year. Maintain an “Overweight” rating.
Risk warning
Risks of failure or inability to industrialize new products, risk of increased market competition, risk of biomedical market expansion, risk of production capacity release falling short of expectations, etc.