Matters:
The company released its three-quarter report of '24, 24Q1-3, operating income of 2.181 billion yuan (+8.83%), net profit to mother of 0.436 billion yuan (+9.04%), deducting non-net profit of 0.388 billion yuan (+14.88%). In 24Q3, operating income was 0.606 billion yuan (+17.51%), net profit to mother 0.08 billion yuan (+22.70%), after deducting non-net profit of 0.063 billion yuan (+49.89%).
Commentary:
Revenue grew steadily, and profits were disrupted by phased factors. On the revenue side, although the 2024 macro environment caused some disturbances to China's IVD industry, overall, 24Q3 company's revenue achieved relatively steady growth, and regular business revenue increased steadily. On the profit side, 24Q3 equity incentive fee confirmation and exchange profit and loss changes had a certain impact on the company's profit growth rate. However, as the company gradually achieves restorative growth at the pace of admission in the domestic market, and the continuous introduction of new products such as the company's overseas respiratory trifecta test kit, the company's performance is expected to be further flexible.
Overseas product certification is progressing steadily and is expected to contribute to increased performance. 1) Respiratory tract triple test kit: 2024, US subsidiary “WONDFO USA CO. “, LTD”'s novel coronavirus, influenza A virus, and influenza B triple test kit POC version and OTC version products have successively obtained FDA EUA approval. The US respiratory tripartite testing market space is vast, and the company established an American subsidiary as early as 2009, and the sales base is deep. As respiratory triple test kits are gradually released in the US, the company's expansion in the US hospital market is expected to accelerate, leading to increased performance. 2) Malaria testing products: In July 2024, the company announced that the company's malaria testing products had been pre-certified by the World Health Organization and included in the World Health Organization's recommended procurement list for in vitro diagnostic products, providing strong support and guarantee for the company to expand overseas markets such as Africa and Southeast Asia and help global malaria prevention and control. 3) Fentanyl urine test reagent:
In August 2024, the company announced that the fentanyl urine test reagent has obtained US FDA 510 (k) approval and can be sold in the US and countries that have approved the US FDA 510 (k) license through e-commerce, pharmacies, supermarkets, etc., which has a positive effect on the company's sales and international business development.
The release of a 24-year restricted stock incentive plan is expected to help accelerate the development of chemiluminescence business. In July 2024, the company announced a 24-year restricted stock incentive plan. The performance assessment target for the previous restricted stock incentive plan (2020) was the net profit growth rate of the current restricted stock incentive plan (2024). The performance assessment target of the current restricted stock incentive plan (2024) added an assessment of the sales revenue growth rate of the chemiluminescence business on the basis of the net profit growth rate of the chemiluminescence business. The chemiluminescence business is an important growth engine for the company's future development, and has important market value and development potential. After the implementation of this restricted stock incentive plan, while fully mobilizing the enthusiasm of the company's core team, it is expected to help accelerate the development of the company's chemiluminescence business.
Investment advice: Taking into account the pace of products going overseas, changes in exchange profit and loss, and share payment fees, we expect the company's 24-26 operating income to be 3.25, 3.98, and 4.88 billion yuan (the original forecast values for 24-26 were 3.36, 4.11, and 5.05 billion yuan), and net profit to mother for 24-26 is 0.65, 0.8, and 1.01 billion yuan respectively (consistent with the original forecast value). The year-on-year growth rates are +33.8%, 23.3%, and +25.7%, respectively, corresponding to PE 20, 16, and 13 times, respectively. According to DCF model estimates, the company was given an overall valuation of 16.4 billion yuan, corresponding to a target price of 34 yuan, maintaining a “recommended” rating.
Risk warning: 1. Regular business revenue falls short of expectations; 2. The volume of new technology platforms falls short of expectations.