The company released its 2024 semi-annual report: the first half of 2024 achieved revenue of 0.299 billion yuan, net profit to mother of 0.057 billion yuan, and net profit of non-return to mother of 0.058 billion yuan, with year-on-year increases of 11.55%, -38.13%, and -36.03%, respectively.

Among them, the second quarter achieved revenue of 0.153 billion yuan, net profit of 0.026 billion yuan, and net profit of non-return to mother of 0.027 billion yuan, with year-on-year increases of 16.62%, -44.13%, and -39.85%, respectively.

Regular business grew month-on-month and accelerated year-over-year in Q2. In the first half of 2024, after deducting products related to specific acute respiratory infectious diseases, the regular business achieved sales revenue of 0.285 billion yuan, an increase of 18.86% year on year, with overseas routine business increasing by more than 20% year on year. Regular business achieved revenue of over 0.16 billion yuan in the second quarter, up 22% year on year and 6% month on month. Due to reasons such as staffing and R&D expenses, the profit side is still under pressure in the short term. In the first half of 2024, the sales/management/ R&D cost ratios were 32.29%/16.06%/26.13% respectively, up 501/108/355bp from the same period last year. As the workforce is basically in place, it is expected that cost management will stabilize and profit margins will gradually be optimized.

The clinical business layout continues to be strengthened, and the GMP factory has entered the trial production stage. The R&D pipeline of the company's customers is mainly concentrated in the pre-clinical or early clinical stages. In the future, as the project progresses, there is potential for clinical-side product demand. The company has successfully developed nearly 40 high-quality GMP grade products, including cytokines, cell-activating antibodies and magnetic beads, omnipotent nucleases, and Cas enzymes, which are suitable for large-scale production and clinical research of CGT drugs. The company's GMP production plant in Suzhou has entered the trial production stage to better support clinical and commercial production needs. At the same time, the company has completed a wholly-owned acquisition of Beijing Hengdao Medical Testing Laboratory Co., Ltd. to further enhance translational medicine and clinical pathology service capabilities.

Continue to strengthen overseas layout and accelerate the promotion of the global strategy. The company continues to increase investment in overseas R&D, comprehensively strengthen laboratories and team building, and plans to further expand the global R&D network through new laboratories or epitaxial mergers and acquisitions in Europe. The company plans to establish overseas production bases to further improve delivery efficiency, strengthen supply chain advantages, and ensure that it maintains a leading position in global market competition.

Profit forecast and investment advice: We are optimistic about the company's gradual improvement in global competitiveness as a leader in recombinant protein reagents in China. Considering that the company is still growing and that projects such as Baishi Medical and the Suzhou GMP factory are also in the investment period, it will affect short-term profits to a certain extent, and profit margins will gradually improve as subsequent revenue increases and cost control is strengthened, maintaining a “highly recommended” rating. The estimated net profit for 2024-2026 is 0.125, 0.157, and 0.198 billion yuan, corresponding to PE32/26/20x.

Risk warning: Risks such as demand recovery falling short of expectations, fluctuating cost rates, increased competition, and exchange rates.