Incidents:

The company released the 2024 semi-annual report. 2024H1 achieved operating income of 0.203 billion yuan, a year-on-year increase of 6.44%; net profit to mother of 0.02 billion yuan, a year-on-year decrease of 7.37%; net profit after deducting non-return to mother of 0.019 billion yuan, an increase of 6.14% year-on-year, and EPS of 0.32 yuan.

Steady growth in performance and good control of cost levels

The company's overall performance in the first half of 2024 maintained a steady growth trend. The gross margin was 63.57%, up 2.85pct year on year, and the gross margin level remained high. The sales expense ratio was 24.11%, down 0.09pct year on year; the management expense ratio was 15.34%, up 3.37pct year on year; the financial expense ratio was 0.57%, up 0.11pct year on year. The increase in management expenses was mainly related to the company's equity incentives. Excluding this effect, the company's three expense levels were well controlled and continued to remain at a stable level.

Allergy and self-immunity testing continued to grow steadily, and the industry position remained leading in the first half of the year. The company's two major product lines, allergy and self-immunity testing, continued to grow steadily in the first half of the year. At present, the company's allergy products have been expanded to multiple series, covering 69 types of IgE allergens and 80 types of food-specific IgG allergens. The number of IgE allergens that can be detected is leading in the country. The company has obtained a registration certificate for sale, and a total of 94 allergens are in the registration and development stage. The large number of detectable allergens has established the company's barriers in the allergy testing industry. In the field of self-exemption testing, the company uses the first-mover advantage of chemiluminescence technology to explore the market, drive the company's overall product sales, and achieve import substitution. It is expected that the company's two core product lines will continue to grow steadily in the future.

The new desensitizer business is progressing steadily, and growth space is expected to open up

In the first half of 2024, the company actively promoted the new desensitizing drug business. First, it actively recommended patients to go to Lecheng, Hainan to receive desensitization treatment with Ostec products, and the second was to actively apply for phase III clinical trials of house dust mite and dust mite dimite products in the Oetec series products in China and actively cultivate the company's ability to integrate allergy diagnosis and treatment. The market space for desensitizing drugs is broad, and the patient diagnosis rate is low. The company's products are expected to achieve an integrated diagnosis+treatment model for allergic diseases in the future, further opening up room for growth.

Investment advice and profit forecasting

The company's main products are growing steadily, and desensitizing drugs have opened up new growth space. It is estimated that in 2024-2026, the company will achieve operating income of 0.493 billion yuan, 0.605 billion yuan and 736 million yuan, respectively, and realized net profit of 0.068 billion yuan, 0.089 billion yuan and 114 million yuan, respectively. The corresponding EPS is 1.07 yuan/share, 1.41 yuan/share, and 1.81 yuan/share, respectively. The corresponding PE is 21 times, 16 times and 12 times, respectively, maintaining a “buy” rating.

Risk warning

The risk of the company's product price reduction, the risk of R&D falling short of expectations, and the risk of epitaxial development falling short of expectations.