Incidents:
The company released its 2024 quarterly report. 2024Q1 achieved operating income of 2,671 billion yuan, a year-on-year decrease of 1.95%, net profit attributable to mother of 231 million yuan, a year-on-year decrease of 33.80%, and realized deducted non-net profit of 187 million yuan, a year-on-year decrease of 46.01%. The adjusted net profit attributable to shareholders of listed companies not under IFRS was 339 million yuan, a year-on-year decrease of 22.70%, in line with market expectations.
Key points of investment:
The temporary slowdown in customer demand has put pressure on multiple business sectors. According to the company's 2024 quarterly report, 1) 24Q1 laboratory services achieved revenue of 1,605 billion yuan, down 2.92% year on year, gross margin was 44.14%, down 0.34pct year on year, revenue was mainly affected by the decline in global sentiment; (2) the 24Q1CMC business achieved revenue of 582 million yuan, down 2.7% year on year, gross margin was 27.9%, down 5.0 pct year on year, mainly due to factors such as new production capacity conversion in Shaoxing. As orders continue to be fulfilled, we expect results to gradually improve in the next few quarters . (3) The 24Q1 clinical business achieved revenue of 392 million yuan, a year-on-year increase of 4.6%, gross margin of 9.3%, and a year-on-year decrease of 4.7%. We judge that the gross margin situation was mainly affected by increased domestic competition; (4) The 24Q1 macromolecule and CGTCDMO business achieved revenue of 91 million yuan, a year-on-year decrease of 4.1%. The gross margin was -38.6%. The number of employees increased and costs increased, causing the sector to continue to be under pressure.
The growth rate of new orders remained stable, and the company maintained its annual revenue growth target of 10% + unchanged. According to the company's 2024 quarterly report and its official website communication PPT, the company's 24Q1 global customer inquiries and visits picked up year-on-year, and its new orders increased by more than 20% year over year. Among them, new orders for the laboratory business increased 10% + year over year, and new orders for the CMC business increased 40% + year over year.
Looking ahead, the company maintains its 2024 full-year forecast, which means that the revenue side will maintain 10% + growth.
Profit forecasting and investment ratings. The company continues to build an integrated and international CXO service platform. According to the expectations of the company's guidelines, we keep the company's 24-26 profit forecast unchanged. The estimated net profit to mother is 17.14, 19.86, and 2,298 billion yuan respectively, corresponding to PE of 23, 20, and 17 times, respectively, maintaining the “increase” rating.
Risk warning: Drastic reduction in investment in drug research and development, risk of loss of scientific research and technical personnel, reduction in the number of clinical projects, decline in first-level pharmaceutical financing, exchange rate fluctuations, etc.