Incident: The company released its 2024 semi-annual report, achieving revenue of 0.543 billion yuan, an increase of 18.38% year on year; realized net profit due to mother 0.144 billion yuan, up 13.49% year on year; realized net profit deducted from mother 0.132 billion yuan, an increase of 20.72% year on year.

Comment:

Revenue grew steadily, and clinical research service revenue increased rapidly: in the first half of 2024, the company achieved revenue of 0.543 billion yuan, up 18.38% year on year, and its domestic market achieved revenue of 0.413 billion yuan, up 16.02% year on year; foreign markets achieved revenue of 0.13 billion yuan, up 26.51% year on year; for example, by product or service type, drug clinical research service revenue increased 136.07% year on year; achieved net profit of 0.144 billion yuan, up 13.49% year on year; net profit not attributable to mother was 0.132 billion yuan, up 20.72% year on year. Amortization of equity incentive expenses in the first half of the year led to an increase in total costs. If this factor is excluded, net profit to mother increased 26.78% year over year, and net profit without return to mother increased 36.13% year over year.

R&D investment continued to increase, with patents and registration certificates growing together: in the first half of 2024, the company invested 106.212 million yuan in R&D, an increase of 15.62% over the previous year, accounting for 19.56% of revenue. As of June 30, 2024, the company has 27 Class III medical device registration certificates; 65 patents have been authorized, including 59 invention patents and 6 utility models. In June 2024, the company's real-time quantitative fluorescence PCR analyzer obtained a Class III medical device registration certificate, further improving the company's overall solution for accurate tumor detection. The steady increase in the company's R&D investment goes hand in hand with the number of patents and registration certificates, and the launch of new products, which shows that the company continues to enhance its innovation ability and market competitiveness.

Expanding strategic partnerships to advance concomitant diagnostic innovation: On May 22, 2024, the company signed a new companion diagnostic collaboration with Boehringer Ingelheim to screen and identify patients with non-small cell lung cancer who are most likely to benefit from targeted therapies. On June 25, 2024, the company and Schweier announced a strategic partnership to jointly develop an accompanying diagnostic reagent to detect isocitrate dehydrogenase 1 and 2 gene mutations. The conclusion of strategic cooperation with global enterprises will further promote the company's innovation and development in the field of accompanying diagnosis.

Profit forecast, valuation and rating: As a leading enterprise in the domestic cancer diagnosis industry, the company's performance continues to grow rapidly as cooperation and innovation continue to advance. We maintain the company's 24-26 net profit forecast of 0.315/0.379/0.454 billion yuan, and the current price corresponds to 24-26 PE at 22/19/16 times, maintaining a “buy” rating.

Risk warning: The risk that product development and approval falls short of expectations, and market competition increases the risk.