Incident: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.649 billion yuan, an increase of 13.70% over the previous year; achieved net profit to mother of 0.016 billion yuan, turning a loss into a profit; and deducting non-net profit of -0.015 billion yuan.

On a quarterly basis, the company's revenue for the second quarter of 2024 was 0.348 billion yuan, up 29.33% year on year. Net profit to mother was 0.011 billion yuan, after deducting 0.001 billion yuan of non-net profit. Thanks to the good recovery of life science business and the rapid deployment of diagnostic products, the company achieved rapid growth in the single quarter, such as expenses related to restoring equity incentives. The company's net profit for the second quarter is expected to be about 0.027 billion yuan, and the net interest rate for the single quarter is about 7.8%, which has already ushered in an inflection point in performance.

Expense investment management is becoming more and more complete, and profitability is rapidly improving. The company's gross profit margin for the first half of 2024 was 70.74%, down 1.54 pp year on year, and gross margin remained stable; sales expenses ratio was 33.52%, down 6.24pp year on year. All expenses other than share payments showed a downward trend; the management expenses ratio was 16.71%, down 3.61 pp year on year, mainly due to a decrease in rent expenses and office expenses; financial expenses ratio 0.14%, up 1.79pp year on year; the company's 2024H1 net profit margin was 2.36%, up 16.72 pp year on year.

Regular business resumed rapidly, and an inflection point in performance growth was reached. The company focuses on the three major sectors of life science, in vitro diagnosis, and biomedicine. Through autonomous and controllable upstream technical advantages and product performance control capabilities, the company continuously enriches the product portfolio, expands application scenarios, and continues to deliver reagents, raw materials and overall solution services to the fields of scientific research, in vitro diagnosis, vaccine research and development, animal quarantine, etc. With the increasing recovery of existing market demand and the accelerated development of new markets, the company's regular business has gradually freed from the legacy of COVID-19. 2024H1

1. The life science business increased by about 18% year-on-year in the first half of 2024. The company's life science division developed more than 160 new products and completed 16 core technology developments. In particular, cell protein reagent product line companies continued to launch innovative high-performance products, such as ready-to-use luminescent liquid, PVDF transfer film, etc., to break the monopoly of imported brands and achieve high performance growth. At the same time, thanks to the continuous improvement of localized operations in North America, Europe and other regions, related reagent products use rapid output from online and offline channels to further boost core business growth.

2. In vitro diagnosis business, the year-on-year increase of about 32% in the first half of 2024. The company continued to focus on the fields of characteristic diseases such as Alzheimer's disease and cardiovascular disease. A total of 6 AD detection reagents were approved in the first half of the year. It is currently the enterprise with the highest number of certified AD markers in China through blood test samples based on chemiluminescence platforms. Many of these indicators are domestic exclusive, and are expected to be rapidly released in the future with performance advantages. At the same time, the company also stocks innovative products with various high-tech barriers such as kidney disease and free encephalitis. Some varieties are close to mass production and sales, and are expected to further accelerate the diagnosis business. growth.

3. In the biomedical business, the company continues to improve product services such as R&D reagents, quality control agents, and core raw materials, and officially launched the GLP-1 fermentation supply chain solution to achieve 5000L fermentation scale preparation, with an annual production capacity of several tons. Currently, the company has provided nearly 100 kg of supply to many domestic customers, and is expected to continue to release in the future.

The core products went overseas quickly, and the performance was outstanding in many overseas markets. The company's international business focuses on promoting “overseas” superior product lines. Overseas revenue in the first half of 2024 was 0.041 billion yuan, an increase of 143.82% over the previous year. Sales in North America, Europe and other regions showed a multiplier increase over the same period last year. By the end of June 2024, the company's products covered 60+ countries/regions, and 10 subsidiaries spread across Hong Kong, Singapore, etc., and new customers and repeat customers have become an important driving force for performance growth.

Profit forecast and investment recommendations: According to performance data, we expect the company's revenue to be 1.611, 2.062, and 2.644 billion yuan in 2024-2026, up 25%, 28% year-on-year; the company's net profit to mother is expected to be 0.056, 0.241, and 0.43 billion yuan in 2024-2026, up 179%, 326%, and 79% year-on-year. The company's current stock price corresponds to 137, 32, and 18 times PE in 24-26, and corresponding to 57, 28, and 17 times PE after restoration of incentive fees. We believe that the company is in a period of rapid growth after transformation. The revenue scale and profitability are expected to rise rapidly under the continuous volume of major products. Short-term incentive costs may be disrupted, and a certain valuation premium can be given to maintain a “buy” rating.

Risk warning events: New product development risks, policy change risks, increased risk of market competition, etc. Public data used in research reports may be delayed or not updated in a timely manner.