Seccoside announced its 2024 interim results. In the first half of 2024, the company's revenue was 0.16 billion yuan, +12.4% year over year; net profit to mother was 0.06 billion yuan, +4.1% year over year; net profit after deducting non-return to mother was 0.06 billion yuan, +3.6% year over year.

In the 2024Q2 quarter, the company's revenue was 0.08 billion yuan, +11.4% year over month, +9.7% month on month; net profit to mother 0.03 billion yuan, -4.0% year on year, +6.1% month on month; net profit without return to mother was 0.03 billion yuan, -4.7% year on year, +5.7% month on month.

The revenue side maintained steady growth, and the profit side was under pressure in the short term. Secoheed maintained steady revenue growth in the first half of 2024 and the 2024Q2 single quarter. The 2024Q2 profit side experienced a year-on-year decline in the single quarter, mainly affected by factors such as increased depreciation and amortization expenses due to the completion of the Daxing base project, as well as a decrease in net income from financial expenses due to exchange rate fluctuations and lower interest rates on bank deposits. Among them, management expenses increased 2.9 percentage points compared to the same period last year, and the absolute amount of financial expenses revenue decreased by 4.77 million yuan.

The company's sales expenses are well controlled. The 2024Q2 sales expenses rate for a single quarter was 11.0%, a decrease of 3 percentage points compared with the same period last year, and the R&D expenses rate was 6.7%, which remained stable compared with the same period last year.

High-performance instruments were put on the market, and domestic replacement was in progress. Secoside continues to improve the coagulation testing product system, comprehensively promote technical improvement and marketing of products such as the SMART-8800 coagulation flow line and the SF-9200 fully automatic coagulation analyzer, actively develop high-quality customers, expand the channel network, and expand market share. During the reporting period, in response to the demand for coagulation tests in domestic tertiary hospitals, the company actively accelerated the development process of new products such as coagulation blood flow lines, Anti-Xa, LA, etc., and obtained medical device registration certificates for new products such as lupus anticoagulant (LA) test kits and lupus anticoagulant (LA) quality control products. At the same time, the company's instruments, equipment and reagents have obvious cost performance advantages compared to major foreign brands, and are highly competitive in the context of import substitution.

Maintain a “Highly Recommended” investment rating. We are optimistic about Secoside's competitiveness in the context of coagulation and domestic replacement. At the same time, the company's assembly line and high-speed machine installation will lay the foundation for future high-quality development. We expect Secosheed's 2024-2026 net profit to be 0.15 billion yuan, 0.18 billion yuan, and 0.24 billion yuan, respectively, +24% compared to the same period, +24%, +26%, and +33%. The corresponding PE is 16x, 13x, and 10x, respectively, maintaining a “highly recommended” investment rating.

Risk warning: Risk of R&D falling short of expectations, risk of sales falling short of expectations, risk of installation falling short of expectations, risk of changes in the payment environment, etc.