Description of the event
The company released its 2022 annual report, which achieved annual revenue of 355 million yuan, a decrease of 3.76%; achieved net profit of 45 million yuan, a decrease of 35.71%; and achieved net profit of 41 million yuan after deducting non-return mother's net profit, a decrease of 34.64%. The company released its report for the first quarter of 2023. Q1 achieved revenue of 97 million yuan, an increase of 24.68%; achieved net profit of 13 million yuan, an increase of 7.99%; and achieved net profit of 12 million yuan after deducting non-return mother's net profit, an increase of 5.89%.
Incident reviews
2023Q1 revenue/performance has picked up. By product, the revenue achieved by the experimental analytical instruments, consumables and service business in 2022 accounted for 91.32% of the main business revenue, a decrease of 3.54%, mainly due to a decline in downstream market demand, and the expansion of new products/new industries had not yet made a significant contribution; the revenue from the clean and environmentally friendly laboratory solutions business accounted for 8.68% of the main business revenue, with revenue falling 5.64%, mainly due to a decline in orders in hand at the end of 2021, which affected revenue confirmation in 2022, but about half of orders in 2022 came from new industries. With 2023Q1, revenue increased 24.68%, and Guimu's net profit increased by 7.99%, which has already picked up.
Gross margin declined slightly in 2022, and the rate of expenses increased during the period. Gross margin decreased by 0.73pct to 47.71% for the full year of 2022, mainly due to a slight increase in raw material costs; the cost rate for the period increased 4.99pct to 33.91%, of which the sales expense ratio increased 2.06pct to 16.5%, mainly due to expanding the layout of new industries and increasing sales staff; the management expense ratio increased 0.98 pct to 7.25%; the R&D expense ratio increased by 2.31pct to 10.82%, mainly due to increased R&D staff/depreciation impact after purchasing houses to fixed assets in Shanghai; same decrease in financial expenses rate 0.35pct to -0.65%.
There was a decrease in operating cash flow in 2022. The company's net operating cash inflow for the full year of 2022 was $08 million, a year-on-year decrease of $41 million. The main reasons include the successive introduction of new products, inductively coupled plasma mass spectrometers (ICP-MS and ICP-MSMS), and the increase in raw materials and inventory products associated with them. Affected by the lengthening of the supply cycle of the entire global supply chain, the company increased its overall inventory reserves; and increased sales and R&D personnel. The payout ratio increased by 1.68 pct and 19.75 pct to 111.62% and 138.04%, respectively.
Mass spectrometer development/sales are progressing smoothly. The company's ICP-MS successfully achieved sales in the fields of semiconductors, medical care, environmental protection, third-party testing, universities, nuclear industry, pharmaceuticals, etc. At the same time, on March 10, 2023, the company officially released LabMS 5000 ICP-MS/MS for R&D and production for the semiconductor industry, completed the entire process of the triple quadrupole mass spectrometry R&D project from project establishment, design, function machine, trial machine to commercial machine, and obtained certification from the International Semiconductor Industry Association SEMI S2 and SEMI E78 from the International Semiconductor Industry Association.
Multi-brand layout, continuous expansion of overseas markets. The company currently owns well-known brands in the industry such as LabTech, CDS, Empore, etc., has sales and after-sales technical service centers in major large and medium-sized cities across the country, and has wholly-owned subsidiaries in the US and Hong Kong. It has established an extensive sales network mainly domestically, extending the US and Europe. Currently, the company's products have been sold to many countries and regions around the world.
Profit forecasting and valuation
It is estimated that in 2023-2025, the company's operating income will be 432/510/596 million, respectively, with a year-on-year growth rate of 21.81%/18.02%/16.70% respectively; the net profit of the mother is 0.68/0.81/95 billion yuan respectively, with a year-on-year growth rate of 53.10%/19.27%/16.12%, respectively. The corresponding PE for 23/24/25 was 43.26/36.27/31.24 respectively, which was covered for the first time, giving an “increase in holdings” rating.
Risk warning
Mass spectrometer sales fell short of expectations; implementation progress of ongoing research projects fell short of expectations