Event: Shengxiang Biotech releases 2024 semi-annual results forecast
It is estimated that in the first half of 2024, the company will achieve operating income of 0.71 billion yuan, a year-on-year increase of 66%; net profit to mother of 0.15-0.165 billion yuan, profit margin 21.1% -23.2%; after deducting non-net profit of 0.12-0.13 billion yuan, profit margin 16.9%-18.3%. In the second quarter of a single quarter, the company is expected to achieve revenue of 0.32 billion yuan, a year-on-year increase of 37%; net profit to mother of 0.069-0.084 billion yuan, with a profit margin of 21.6% to 26.3%; after deducting non-net profit of 0.046-0.056 billion yuan, a profit margin of 14.5% to 17.6%. The net profit margin after deduction declined month-on-month in the second quarter. It is expected to be mainly related to the month-on-month decline in revenue volume, and the net interest rate to mother increased month-on-month. It is expected to be mainly related to government subsidies and investment income during the period.
The respiratory testing business maintained a high level of prosperity in the second quarter, and “the off-season is not weak” can be verified.
In the research report “Respiratory Testing Industry Depth” published on May 6, 2024, we mentioned “Respiratory Testing Industry Depth: Optimizing the Long-term Sentiment of the Respiratory Testing Industry” that “the respiratory testing industry has a 'four or six opening' pattern”, and that the industry has a “low season is not weak”. Judging from current industry-level high-frequency data and enterprise-level business conditions, this judgment has been well confirmed.
At the industry level, as of June 23, the National Influenza Surveillance Network Laboratory tested a total of 0.109 million influenza-like case specimens, which is 76.25% of the total number of Q1 samples (0.1429 million), continuing the “four six opening” pattern during the off-peak season (4/6 = 66.67%);? At the enterprise level, Shengxiang Biotech's sales revenue for respiratory testing products in the first quarter exceeded 0.2 billion yuan, and the overall forecast for the first half of the year was more than 0.4 billion yuan. The business continued its good momentum in the second quarter.
Product+brand, practice has proven that the company can dominate the market in fierce competition.
The Shanghai Health Commission Clinical Examination Center organized and carried out an interlaboratory quality assessment (EQA) investigation for multiple respiratory pathogens nucleic acid testing at the end of 2022. Judging from the results, out of 138 laboratories in 24 provinces, 120 laboratories used reagents that have obtained NMPA registration, and mainly the PCR fluorescent probe method, which shows that the vast majority of laboratories still focus on compliance and ease of operation. In terms of brand distribution, 97 laboratories used Shengxiang Biotech's respiratory molecular multi-test reagents, accounting for 70% (97/138), reflecting that the company's products still occupy an absolute dominant market position with reasonable target and platform design, excellent product performance, and excellent sales capabilities in a competitive circuit.
Investment advice:
We expect the company's revenue to increase by 51.5%, 32.2%, and 26.7% year-on-year respectively in 2024-2026; net profit to mother will increase by -5.5%, 34.5%, and 48.4% year on year, respectively, with outstanding growth; maintain the investment rating given to Buy-A, and the target price for 6 months is 20.44 yuan, which is equivalent to a dynamic price-earnings ratio of 35 times that of 2024.
Risk warning:
The risk that the company's business expansion falls short of expectations, the risk of changes in industry policies, and the risk of further intensification of industry competition.