Incident summary
The company announced its results report for the first quarter of 2024 on April 25, 2024. 2024Q1 achieved revenue of 2,671 billion yuan, a year-on-year decrease of 1.95%; net profit due to mother of 231 million yuan, a year-on-year decrease of 33.80%; net profit after deduction of 187 million yuan, a year-on-year decrease of 46.01%; adjusted net profit of 340 million yuan, a decrease of 22.7% year on year; gross profit margin of 32.66% and a net profit margin of 8.08%. The decline in 2024Q1's performance was mainly based on ① integrating laboratory service businesses in Shanghai and Ningbo/Beijing, resulting in a one-time loss due to the closure of the Shanghai laboratory; ② income from changes in fair value of the company's assets decreased by 29.71 million yuan compared to 2023Q1; ③ increased financial expenses, with a financial expense ratio of 2.38%, an increase of +0.94pp over the same period last year.
Key points of investment
Order demand resumed, and revenue guidance maintained throughout the year
The company's 2024Q1 new orders grew 20% + year over year; the company expects revenue growth of more than 10% in 2024; the company plans to step up repurchases, with a total repurchase amount of no less than 200 million yuan and no more than 300 million yuan of A-shares, and cancels all of them.
New orders for laboratory services are growing steadily
2024Q1 laboratory services achieved revenue of 1,605 billion yuan, a year-on-year decrease of 2.9%; gross margin was 44.1%, a year-on-year decrease of 0.3 pct. New orders for 2024Q1 laboratory services increased by more than 10% year over year.
CMC sector gross margin declined slightly
The 2024Q1CMC (small molecule CDMO) service achieved revenue of 582 million yuan, a year-on-year decrease of 2.7%, gross margin of 27.9%, and a year-on-year decrease of 5.0 pct. The slight decline in revenue was mainly affected by the pace of project delivery. The decline in gross margin was mainly based on the transformation of CMC facilities in Shaoxing and an increase in the number of employees leading to cost increases. New orders for 2024Q1 CMC (small molecule CDMO) services increased by more than 40% year over year.
Revenue from clinical research services is rising steadily
2024Q1 clinical research services achieved revenue of 392 million yuan, an increase of 4.6% year on year, mainly based on overseas clinical services and SMO services driving sector revenue growth; gross margin was 9.3%, down 4.7 pct year on year, mainly based on higher employee costs and lower gross margin due to domestic market competition.
Macromolecules and CGT service staff costs have dropped significantly
2024Q1 macromolecule and cell and gene therapy services achieved revenue of 91 million yuan, a year-on-year decrease of 4.1%, mainly based on a decline in testing service revenue; gross margin was -38.6%, a year-on-year decrease of 26.9pct, mainly due to an increase in the number of employees.
Profit forecasting
Due to the decline in global investment and financing, we expect the company's 2024-2026 revenue to be 129.08/148.80/17.408 billion yuan (the original 2024-2025 was 175.13/22.05 billion yuan); net profit to mother is 16.13/18.25/2.01 billion yuan (the original 2024-2025 was 26.11/3.444 billion yuan); and the corresponding EPS is 0.90/1.02/1.23 yuan/share (the original 2024-2025 was 2.19/2.89 yuan/share), adjusted to “gain” rating.
Risk warning: Order growth falls short of expectations, large order fluctuations affect performance, exchange rate fluctuations affect performance, capacity release falls short of expectations, and risk of loss of core personnel.