Matters:

The company released its 24-year report, with operating income of 1.223 billion yuan (-3.71%), net profit of 0.234 billion yuan (-15.84%) to mother, deducting non-net profit of 0.212 billion yuan (-7.52%). 24Q2, operating income of 0.536 billion yuan (-8.12%), net profit to mother 0.097 billion yuan (-31.36%), after deducting non-net profit of 0.079 billion yuan (-24.44%).

Commentary:

The low-temperature storage business was under pressure in the short term, but the new non-storage industry performed well. Looking at the low temperature storage business, 24H1's low temperature storage business revenue increased by more than 20% month-on-month, but the main reason was the delay in the execution of orders for the solar vaccine solution, which led to a 50% drop in this business. If this impact was removed, the company's low temperature storage business revenue was basically flat year on year. 24H1 leveraged the competitive advantage of scenario solutions such as automated sample banks in China, and new orders increased 200% year over year. In the future, as orders gradually confirmed revenue, the company's low temperature storage business performance is quite flexible. Looking at the new non-storage industry, as the product serialization layout continues to improve, the new pattern of drug use automation, laboratory consumables, digital public health, and pulp harvesting consumables continues to maintain high growth. The recovery in consumables and other service revenue drives 24H1's service revenue to increase 26% year over year, and the new non-storage industry's performance is still impressive. Furthermore, with the launch of the Shanghai Yuanshi Instrument merger and acquisition, the new pattern of multi-category development has been further consolidated, and the new non-storage industry continues to contribute new growth momentum.

Overseas business is affected by delayed delivery of project-type business orders, and the ability of domestic business to seize scenario opportunities continues to increase. 24H1's overseas business achieved revenue of 0.328 billion yuan, a year-on-year decrease of 24.17%. It was mainly affected by delays in delivery of overseas project business orders, but since entering 24Q3. The order delivery speed for the company's overseas projects has accelerated, and it is expected that 24H2 performance will rebound; by the end of the company's mid-year report period, the business opportunity space for project-related business exceeded 1 billion yuan. 24H1's domestic business achieved revenue of 0.892 billion yuan, an increase of 6.93% over the previous year. On the basis of consolidating network system construction, the company's domestic business focused on the trend of end users shifting from traditional single products to scenario solution requirements, and the ability to seize scenario opportunities continued to increase. 24H1's scenario solution business revenue increased nearly 1 times, and the number of scenario solution users increased by more than 20%. Among them, the number of TOP users doubled.

Gross margin decreased under the new accounting standards, and gross margin increased month-on-month after retroactive adjustments. The gross margin of the 24H1 company is 48.27%. Under the Ministry of Finance's new accounting standards, guarantee costs are included in operating costs. If the company's gross margin is restored according to the same caliber, the gross margin of the company is 50.11%. After the retroactive adjustment, 24H1 company's gross margin increased 1.32 percentage points month-on-month compared to 23H2. At the same time, 24Q2's gross margin also increased month-on-month. The company's innovation-driven business structure upgrade and overall process cost reduction and efficiency were beginning to bear fruit, and the gross margin level continued to improve.

Investment advice: We keep our profit forecast unchanged. We expect the company's net profit to be 0.5, 0.61, and 0.75 billion yuan in 24-26, with year-on-year growth rates of +22.2%, +23.5%, and +21.7%, respectively. The corresponding PE is 16, 13, and 11 times, respectively. According to DCF model estimates, the company was given an overall valuation of 11 billion yuan, corresponding to a target price of about 35 yuan, maintaining a “recommended” rating.

Risk warning: 1. Downstream market demand for biomedical cryogenic storage falls short of expectations; 2. Revenue from the IoT business and biosafety business falls short of expectations; 3. Globalization has fallen short of expectations.