Description of the event

The company released its 2023 mid-year report. In the 2023Q2 single quarter, the company achieved operating income of 163 million yuan, up 6.59% year on year; net profit attributable to mother was 119 million yuan, down 81.31% year on year; net profit after deducting non-return net profit of 03 million yuan, down 71.24% year on year.

Incident comments

The overall revenue recovery momentum was good, and the profit side was affected by stock payments and high return on investment in the previous year. 2023H1 achieved operating income of 295 million yuan, an increase of 0.45%; net profit of 32 million yuan, a year-on-year decrease of 80.72%; net profit of non-return net profit of 119 million yuan, a year-on-year decrease of 81.16%. Among them, the revenue of magnetic bead products used for nucleic acid testing last year was 35 million yuan. Excluding this influence, 2023H1's revenue increased 14.04% year-on-year. In the 2023Q2 quarter, the company achieved revenue of 163 million yuan, an increase of 23.41% over the previous quarter, mainly due to a 31.50% increase in revenue from chromatographic fillers and chromatography media products, which is clearly recovering. In addition, the amortization of share payments and investment income from the acquisition of Spectrum Instruments in the same period last year had a significant impact on the profit growth rate of the current period. Excluding related effects, 2023H1's net profit attributable to income was 94 million yuan, a year-on-year decrease of 25.50%; net profit of non-attributable net profit of 81 million yuan was deducted, a year-on-year decrease of 29.31%.

The number of projects continues to grow, and R&D investment is being increased to lay out business growth points. 2023H1, the sales revenue of the company's chromatographic fillers and chromatographic media products reached 211 million yuan, an increase of 5.45% over the previous year. Among them, filler products, as the company's main revenue support, accounted for 71.46%, an increase of 3.51 pct over the previous year. The number of new applications for chromatographic fillers and chromatographic media products reached 630 in the first half of the year, including 12 Phase III projects and 3 commercialized projects. The company continued to invest in R&D. 2023H1, the company invested 83 million yuan in R&D, an increase of 113% over the previous year, with R&D accounting for 28.2%.

Promote the continuous expansion of production scale and ensure stable and high-quality supply capacity. In the first half of the year, in order to speed up the import substitution process, the company implemented technical transformation projects for 40 tons/year agarose microsphere chromatography medium and 10 tons/year glucan microsphere chromatography medium at the Changshu production site to promote equipment and facility installation, stand-alone commissioning, joint commissioning, and feed trial production. It is expected that acceptance conditions will be met by the end of the third quarter. Furthermore, the company's 29,400 square meter R&D center building has entered the renovation stage. It is expected to be put into use in the first half of 2024. In the future, the company's product line will be further enriched, the product structure will continue to be optimized, and the supply capacity will be stable and efficient.

The company's revenue for 2023-2025 is expected to be 958 million yuan, 1,260 million yuan, and 1,649 billion yuan, up 35.7%, 31.5%, and 30.8% year on year, and net profit for attributable income is 349 million yuan, 491 million yuan, and 674 million yuan, up 27.0%, 40.6%, and 37.3% year on year. The current stock price corresponds to PE 39, 28, and 20 times, maintaining the “buy” rating.

Risk warning

1. If the development of biopharmaceuticals falls short of expectations, it will affect the company's performance; 2. If the company's core technical personnel are lost, it will affect the company's R&D capabilities.