Key points of investment
Performance:
2024H1, the company's revenue was 0.72 billion yuan, YOY 67.6%, net profit due to mother 0.16 billion yuan, YOY 70.9%, after deducting non-attributable net profit of 0.12 billion yuan, YOY 288.5%.
2024Q2, revenue 0.33 billion yuan, YOY 40.2%, net profit due to mother 75.68 million yuan, YOY 139.0%, net profit not attributable to mother 47.37 million yuan, YOY 71.6%.
Growth: Respiratory testing continues to gain strength
The company has built a rich product matrix in various fields such as respiratory diseases, maternal and child health, hematologic infectious diseases, genetic sequencing, and immune diagnosis, and has gradually entered a stage of volume growth. In particular, in the field of respiratory diseases, the operating revenue of 2024H1's respiratory products is basically the same as the total revenue for the full year of last year (in 2023, the company's respiratory product revenue exceeded 0.4 billion yuan, a year-on-year increase of 680%). In addition, other 2024H1 production lines are worth paying attention to: ① In the field of maternal and child health, the company's Coxsackie virus A6/A10 nucleic acid detection kit (PCR fluorescent probe method) and human MTHFR gene polymorphic nucleic acid detection kit (PCR-fluorescent probe method) were approved for marketing; ② In the field of blood-borne infectious diseases, the company's hepatitis B virus ribonucleic acid (HBV RNA) test kit (PCR-fluorescent probe method) was approved and marketed; ③ in the field of hepatitis immunodiagnosis; Field, subsidiary Ansai diagnostic products The matrix was further enriched, and new registration certificates were obtained for progesterone (Prog) and human chorionic gonadotropin (HCG) detection reagents, and successfully entered the gynecological disease market.
In terms of R&D, in the first half of 2024, the company's total R&D investment increased by 41.77% year-on-year, further increasing R&D investment in infectious disease series (covering key areas such as respiratory, hematogenous, and maternal and child health). In addition, R&D investment in immunochemiluminescence detection series and mobile molecular diagnosis series also increased significantly. These strategic R&D investments have laid a solid foundation for the company's future technological innovation and market competition.
We believe that the company has accumulated a large amount of experience in the field of respiratory testing and has shined well in the respiratory disease testing market since 2023, continuing to drive the company's rapid revenue growth. With the continuous expansion of domestic and foreign in vitro diagnostic markets and the acceleration of domestic procurement policies, the company, as a leading molecular diagnostic enterprise, has built a rich product matrix in various fields such as respiratory diseases, maternal and child health, hematogenous infectious diseases, sequencing, etc., and has a certain first-mover advantage, and is expected to benefit preferentially from the rapid development of the industry.
Profitability analysis:
Gross margin and net profit margin: 2024H1's gross margin was 77.3%, up 10.5 pct year on year, and net sales margin was 18.9%, down 2.3 pct year on year. Expense rate for the period: 2024H1's sales expenses rate decreased by 4.9 pcts year on year, management expenses rate decreased by 1.2 pct year on year, and R&D expenses rate decreased by 4.8 pct year on year.
Operating cash flow: 2024H1's net operating cash flow was -62.8 million yuan, an improvement over the previous year (-0.12 billion yuan for 2023H1).
The sharp fluctuation in the company's cost ratio and operating cash flow during the period was mainly related to the sharp decline in COVID-19 testing-related business. Looking ahead to 2024, we believe that with the completion of COVID-19 related testing services, the company's cost ratio is expected to decline slightly and lead to a recovery in net interest rates during the period. Furthermore, considering that the conventional reagent business is expected to continue to grow rapidly, changes in the product sales structure are expected to lead to a slight increase in gross margin.
Profit Forecast and Valuation:
The company is a domestic molecular diagnosis supporter with advanced technology and complete products. The company was founded and built a full-scenario solution with independent core technology to solve market pain points in a targeted manner. Products such as respiratory, hepatitis, and HPV have been recognized by the market, and the performance advantages can be continued in new products. We expect the company's EPS to be 0.56, 0.78, and 1.02 yuan respectively in 2024-2026. The current stock price corresponds to 2024 PE to 34.5 times, maintaining the “gain” rating.
Risk warning
There is a risk that gross margin will decline due to increased market competition, the risk that sales of new products will fall short of expectations, policy events, etc.