Incidents:
The company issued an annual report for 23 and a quarterly report for '24. In the full year of '23, the company achieved operating income of 760 million yuan, a year-on-year increase of 29.65%, achieved net profit of 135 million yuan, an increase of 86.06% over the previous year, and realized deducted non-net profit of 114 million yuan, an increase of 70.58% over the previous year. The 24Q1 company achieved operating income of 185 million yuan, a year-on-year increase of 17.42%, and realized net profit of 0.23 million yuan, a year-on-year decrease of 10.22%. It was mainly due to short-term pressure on the profit side due to reduced government subsidies, and achieved deduction of 20 million yuan in non-net profit, an increase of 7.74% over the previous year, in line with market expectations.
Key points of investment:
The number of employees is growing steadily, there are many projects involved, and hospital coverage continues to expand. According to the company's 23 annual report and 24 quarterly report, by the end of '23, the number of employees had increased by 548 to 4,186, an increase of 15% over the previous year. As of 24Q1, the total number of employees in the company was 4,407, with more than 4,200 professional business personnel, reflecting strong business demand and a good development trend. By the end of '23, the company had implemented 1,832 projects, and had participated in more than 3,000 SMO projects. The company has now promoted the launch of 61 new oncology drugs, including 60 ADC projects, 55 CAR-T projects, and 75 dual-antibody projects. The company can now cover more than 1,300 clinical trial institutions, cover nearly 190 cities in China, and can quickly respond to and meet customer needs at various locations across the country.
New orders and in-hand orders have continued to grow rapidly. According to the company's 23 annual report, the amount of new tax-free contracts signed by the company was 1,292 billion yuan, an increase of 23.89% over the previous year. The increase in orders was mainly due to continued investment in R&D capital by global pharmaceutical companies and the increase in demand for outsourcing services for new drug clinical trials 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, it is expected that the penetration rate of SMO in pharmaceutical clinical research and development will further increase. By the end of '23, the amount of contracts excluding tax in the company's stock was 1,881 billion yuan, an increase of 24.97% over the previous year.
Profit forecasting and investment ratings. As one of the earliest companies in China to develop the SMO business, orders continued to grow rapidly, and profit margins gradually recovered. We maintained net profit forecasts of 1.69 million yuan and 212 million yuan respectively for 24-25, and net profit forecasts for the additional 26 years at 253 million yuan, corresponding to PE of 17, 13, and 11 times, respectively, maintaining a “buy” rating.
Risk warning: risk of falling orders, risk of falling demand for pharmaceutical R&D services, risk of loss of core talent, etc.