Description of the event
The company released its annual report for 2023 and the first quarter of 2024. It achieved revenue of 760 million yuan for the full year of 2023, an increase of 29.65% over the previous year; realized net profit of 135 million yuan, an increase of 86.06% over the previous year, and realized net profit after deduction of 114 million yuan, an increase of 70.58% over the previous year. In the first quarter of 2024, we achieved revenue of 185 million yuan, a year-on-year increase of 17.42%, achieved net profit of 22.74 million yuan, a year-on-year decrease of 10.22%, and realized net profit without deduction of 19.57 million yuan, an increase of 7.74% over the previous year.
Incident comments
Profits increased throughout the year, and profitability recovered. The company closely focuses on the established development strategy and actively promotes the implementation of the annual business plan. The rapid increase in revenue is mainly due to the gradual elimination or weakening of the interference of the external business environment with the development of clinical trial projects, and a significant recovery in project business progress. The high increase in net profit due to improved project execution efficiency.
New signings are growing steadily. 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. Through years of accumulated project experience in the industry, professional brands, and word-of-mouth communication among customers, the company signed a new tax-free contract amount of 1,292 billion yuan, an increase of 23.89% over the previous year. The increase in orders is mainly due to continued investment in R&D by global pharmaceutical companies and the like, as well as increased demand for outsourcing 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, it is expected that the penetration rate of SMO in pharmaceutical clinical research and development will further increase. As of December 2023, 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.
The leading effect is prominent, and service recognition continues to increase. As a leader in the domestic SMO field, the company is committed to undertaking SMO projects with innovative and high clinical value new drugs, and the number of SMO projects implemented has also been growing steadily. As of December 2023, the company has participated in more than 3,000 SMO projects, and the number of implemented projects is 1,832. The company serves more than 900 clinical trial institutions. The clinical trial institutions can cover more than 1,300 clinical trial institutions, and the scope of services covers nearly 190 cities across the country. Among them, the main customers are international pharmaceutical companies or well-known domestic innovative pharmaceutical companies. They have cooperated with the top 10 global pharmaceutical companies and the top 10 CROs operating in China to provide clinical trial site management work for well-known pharmaceutical companies and CROs, including MSD, Jingding, Roche, Johnson & Johnson, Novartis, Bristol-Myers, Eli, Hengrui, Kang Fang, etc., and has outstanding service capabilities for high-quality innovative pharmaceutical companies. The SMO service provided is of high quality and efficiency, and is at the advanced level of the same industry.
We expect that in 2024-2026, the company will achieve net profit of 150 million yuan/181 million yuan/217 million yuan, corresponding to the current market value of 18/15/13 million yuan.
Risk warning
1. The popularity of pharmaceutical research and development falls short of expectations;
2. Expansion of scale may bring personnel management risks.