Key points of investment:
On March 19, the company issued an announcement. The board of directors reviewed and approved the “2023 Restricted Stock Incentive Plan” (draft). The incentive plan plans to grant 3.5 million restricted shares to incentive recipients, accounting for about 0.95% of the company's total share capital. Among them, the first incentive recipients involved 50 core technical personnel and key personnel, and granted a total of 3 million restricted shares, with 500,000 shares reserved. The current equity incentive plan sets performance targets for 2023 to 2026, which are based on 2022 operating income. The annual revenue growth for each year is not less than 30%, 70%, 125%, and 200%, respectively.
Since the company went public, it has carried out a total of 5 equity incentives. Compared with the exercise conditions proposed in 2022, the revenue growth rate has further increased. The revenue growth rate in 24, 25, and 26 has exceeded 30%, demonstrating the company's confidence in future performance growth.
The company's 2022 performance forecast shows that in 2022, the company achieved net profit of 25 million yuan to 32.5 million yuan, down about 16.41% to 35.70% from the same period last year; net profit after deducting non-return net profit was 10.5 million yuan to 15.5 million yuan, down 38.53% — 58.36% from the same period last year; the main reasons for the decline in performance are: 1) In 2022, the company increased its investment in independent R&D projects, and at the same time, gross margin of main business declined; 2) During the reporting period, the company increased its business development efforts.
There was a significant increase in the company's order volume in 2023. The amount of new contracts was about 84 million yuan, an increase of about 53% over the same period last year. The amount of unconfirmed revenue from contracts currently being executed exceeds 1.4 billion yuan. The time for the order to turn into revenue will need to be determined according to the progress of the project.
The company is the only A-share listed company that can provide integrated services for preclinical research, clinical research and registration of traditional Chinese medicine, and the company has been integrating traditional Chinese medicine-related businesses since 2021. The “Implementation Plan for Major Projects for the Revitalization and Development of Traditional Chinese Medicine” and the “Special Provisions on the Registration and Administration of Traditional Chinese Medicine” will accelerate the innovation and standardized development of traditional Chinese medicine. I believe the company's Chinese medicine CRO business will be better developed in the future.
The company's earnings per share are expected to be 0.08 yuan per share in 2022, 0.14 yuan per share in 2023, and 0.18 yuan per share in 2024, corresponding to the closing price of 8.00 yuan on December 29. The dynamic price-earnings ratios are 100.00 times, 57.14 times, and 44.44 times, respectively, maintaining the company's “increase in holdings” investment rating.
Risk warning: The R&D progress of self-developed projects is lower than expected, and the order development and confirmation progress is lower than expected