Announcement: Yakkang Biotech released its 2023 Annual Report and 2024 Quarterly Report.
Comment:
The company's performance has been growing steadily. In 2023, the company's revenue was 622,187 million yuan, up 20.45% year on year; net profit to mother was 158.9141 million yuan, a year-on-year decrease of 3.49%; net profit after deducting non-return to mother was 107.1809 million yuan, an increase of 5.00% year on year. Among them, the company's domestic revenue was 528.788 million yuan, up 17.70% year on year; overseas revenue was 92.9516 million yuan, up 39.94% year on year. The first quarter of 2024. The company's revenue was 157.0872 million yuan, up 11.96% year on year; net profit due to mother was 294.794 million yuan, a decrease of 5.06% year on year; net profit after deducting non-return to mother was 22.8681 million yuan, up 2.74% year on year.
Operating conditions by business segment in 2023:
(1) Commercialized mouse model sales: revenue of 367.1967 million yuan, up 13.62% year on year, maintaining a rapid growth trend, accounting for 59.06% of main business revenue.
(2) Customized breeding business: Revenue of 78.8455 million yuan, an increase of 22.24% over the previous year. Mainly in the context of rapid development of commercialized mouse model sales and model customization business, customer customized breeding business requirements were continuously added, accounting for 12.68% of the main business revenue. Relying on a professional breeding management team, standard animal production facilities and strict quality control systems, the company has built a platform for mouse breeding and germplasm preservation to provide customers with comprehensive breeding solutions, including routine breeding, rapid expansion, cryopreservation, live purification and assisted reproduction.
(3) Model customization business: Revenue of 347.814 million yuan, up 49.42% year on year, accounting for 5.59% of main business revenue. The main reasons are: ① the company's market share in the domestic research market has increased steadily, and the overall number of projects has increased; ② the company's standard product library is gradually expanding to meet most customer needs, but some special models still need to be obtained through model customization. Generally, such model construction technology is difficult and time-consuming. The overall price of the project is rising; ③ The company continues to expand overseas business, and the overseas revenue of model customization is growing rapidly.
(4) Functional Pharmacodynamics Business: Revenue of 132.1059 million yuan, accounting for 21.25% of main business revenue, up 36.09% year on year, showing a rapid growth trend. The main reason is that the revenue scale of the functional pharmacodynamics business has grown rapidly with the company's rich mouse product library, improved service system, and increased customer demand. Relying on the company's humanized mouse model and disease mouse model, the company established an innovative drug screening and phenotype analysis platform to provide customers with one-stop functional efficacy analysis services.
(5) Import and export agents and others: Revenue of 8.8027 million yuan, accounting for 1.42 percent of main business revenue. Import and export agents and others mainly include income from the import and export of mice and their non-living substances (cells, blood, tissue, DNA, embryos, semen, protein), as well as income from licensing fees for experimental mouse strains.
Innovative mouse models continue to be launched around the two core strategies of innovation and internationalization. In terms of production capacity construction, the company's domestic facility layout was completed, adding about 80,000 cages of production capacity. The first overseas facility landed in San Diego, USA, and was opened in 2024Q1. In terms of market expansion, in 2023, the company added nearly 800 new domestic customers, including more than 200 new research customers, and added more than 500 industrial customers, further increasing the domestic market penetration rate; the company added more than 100 overseas customers, including more than 80 new research customers and nearly 50 new industrial customers, and maintained rapid growth overseas. In terms of products, the company continues to advance various R&D projects such as “wild mice”, “sterile mice and zisshunds”, “drug-sifted mice”, and “spotted mice” to forwardly lay out next-generation experimental animal models. In terms of technology platforms, in 2023, the company established Niumai Biotech based on NeomabTM, an all-human antibody transgenic model, and integrated sterility related platforms to establish a microbiota research and development center. In terms of personnel, as of the end of 2023, the company had 1506 employees, an increase of 12.30% over the previous year.
Investment advice: We forecast that the company's revenue for 2024-2026 will be 784, 9.78, and 1,199 million yuan respectively, with year-on-year increases of 26.0%, 24.7%, and 22.7%, respectively. The net profit for 2024-2026 will be 2.00, 2.48, and 301 million yuan respectively, with year-on-year increases of 25.7%, 24.2%, 21.3%, and EPS of 0.49, 0.61, and 0.73 yuan respectively. Considering that the company is one of the leading domestic animal enterprises, we give it 35- 2024 40 times PE, corresponding to a reasonable value range of 17.06-19.50 yuan, gives a “superior to the market” rating.
Risk warning: Market competition increases risk, global biomedical R&D expenditure falls risk, university research institutes research expenditure falls risk, overseas regional expansion risk, government subsidies reduce risk.