Matters:
In 2023, the company achieved operating income of 622 million yuan, a year-on-year increase of 20.45%; net profit to mother was 159 million yuan, a year-on-year decrease of 3.49%; net profit after deducting non-return to mother was 107 million yuan, an increase of 5.00% over the previous year. In the first quarter of 2024, the company achieved operating income of 157 million yuan, an increase of 11.96% year on year; net profit to mother was 29.48 million yuan, a decrease of 5.06% year on year; net profit without return to mother was 22.87 million yuan, an increase of 2.74% year on year.
Commentary:
Overseas markets are expanding rapidly. Overseas market revenue in 2023 was 92.95 million yuan, up 39.94% year on year, and the share of revenue rose to 14.94%, of which industrial customers accounted for more than 70% of revenue. The company has sold in more than 20 countries and has served more than 200 customers. In terms of overseas markets, the company still mainly builds its own sales channels. It has formed a BD team of over 15 people, covering the three major regions of North America, Asia Pacific and Europe. It enhances industry popularity and increases customer reach through various methods such as attending academic conferences, increasing advertising, regular email promotion, regular webinars, and systematic offline customer visits. The company participated in more than 30 international academic conferences throughout the year, covering various fields such as oncology, metabolism, self-immunity, and neurology. In addition to building its own sales channels, the company is actively seeking agents in some non-core regions and using agents to increase overseas market coverage on the premise of ensuring the safety of seed sources.
Comprehensive coverage of the domestic market. The company has achieved full coverage of major domestic regions through a multi-center layout strategy. It has established a BD team of nearly 90 people, served more than 2,300 customers, added nearly 800 new customers, and further increased the domestic market penetration rate. In the field of scientific research, on the one hand, the company has increased the market share of research institutes in first-tier cities and increased its development efforts in key second-tier cities. On the other hand, it has strengthened the development of hospital customers. Currently, it covers nearly 600 top three hospitals, with a coverage rate of about 35% of the top three hospitals. In terms of domestic production capacity, the company's facilities in Beijing, Shanghai and Guangdong (Phase II project) have been completed and put into operation, adding about 80,000 cages, an increase of about 40% year over year at the end of 2022. Currently, the seven large-scale production facilities operated by the company have a total production capacity of about 280,000 cages.
Product line research and development continues to lead. As of December 31, 2023, the company has a total of nearly 22,000 commercialized mouse models with independent intellectual property rights. The annual model creation throughput is 6,000+, and the number of models in the four major fields of oncology, metabolism, self-immunity, and neurology continues to expand. In 2023, the company's “Spotted Mouse Program” added nearly 400 new strains, launched nearly 300 humanized mouse strain bank “drug screening mice”, and more than 100 strains are still being developed. In addition to the all-human antibody transgenic mouse model NeoMabTM, the company is also developing all-human single heavy chain antibody and co-light chain antibody models, which are expected to be introduced to the market in 2024 to further meet the diverse antibody discovery needs of customers and continue to expand the business field.
Investment advice: Maintain a “Recommended” rating. We expect the company's revenue for 2024-2026 to be 769 million yuan, 927 yuan, and 1,086 million yuan, respectively, up 23.7%, 20.5% and 17.2% year on year; net profit to mother will be 2.05, 2.49, and 297 million yuan, respectively, up 28.8%, 21.6%, and 19.4% year on year. According to DCF estimates, the reasonable valuation of the company was 6.6 billion yuan, and the corresponding stock price was 16.1 yuan, maintaining the “recommended” rating.
Risk warning: technological upgrading and iteration in the mouse model industry; risk of intellectual property protection for mice; risk of company production and operation; development of the mouse model industry falls short of expectations, and development space is blocked.