Incident: The company released its 2023 annual report, achieving operating income of 400 million yuan, a year-on-year increase of 6.6%; realized net profit attributable to shareholders of the parent company of 86 million yuan, a year-on-year decrease of 7.5%; and realized net profit of 83 million yuan after deduction, a decrease of 3.3% over the previous year.
Performance grew steadily, and profit side was under pressure in the short term. On a quarterly basis, the company's revenue for the 2023Q1/Q2/Q3/Q4 quarter was 0.9/1/120 million yuan (-5.9%/+16%/+10%/+6.8%), and realized net profit to mother was 0.17/0.14/0.24/031 million yuan (-44.4%/-29%/+56%/+14.4%), respectively. Quarterly revenue and profit showed a quarterly recovery. In terms of profitability, the company's gross margin in 2023 was 60.2% (+1.55pp), sales expenses ratio was 8% (-0.4pp), and management expense ratio was 16% (+2pp). Mainly, the company's management and R&D personnel grew rapidly, and personnel remuneration expenses increased rapidly. The net interest rate was 21.3% (-3.12pp), and the R&D expense ratio was 12.72% (+2.4pp), mainly due to the company's increased investment in R&D.
The life sciences sector declined, and the high-end chemicals sector achieved steady growth. By product, the company achieved revenue of 210 million yuan (+14.7%) in 2023, the life science sector achieved revenue of 196 million yuan (-11%), analytical chromatography achieved revenue of 50 million yuan (+6%), materials science achieved revenue of 0.3 billion yuan (+29%), and laboratory consumables achieved revenue of 0.8 billion yuan (+15%). The life science sector declined due to falling demand in major industries.
Acquired Yuanye Biotech and expanded its product line by epitaxial. The company announced on March 18, 2024 that it intends to use bank loans and self-financing of 181 million yuan to acquire 51% of Shanghai Yuanye Biotech's shares. Yuanye Biotech is mainly engaged in R&D, production and sales of scientific research reagents, and has obvious advantages in biochemical reagents, standard products, small molecule inhibitors, liquid reagents and other related products. The “Yuanye” reagent brand has business all over the country and has a certain popularity in the industry. The company has a complete range of products and sufficient inventory. Customers include research institutes in colleges and universities across the country and scientific research customers in the fields of pharmaceuticals, food hygiene, electronics, petrochemicals, bioengineering and other industries. Yuanye Biotech achieved revenue of 100 million yuan and net profit of 37 million yuan in 23 years. Yuanye Biotech promised to deduct non-profits no less than 33 million/40 million/47 million yuan in 24-26 years. Based on financial data for 2023, the operating income and profit levels under the company's consolidated statements will increase by 25.9% and 44.2%, respectively.
Profit forecast: EPS is expected to be $0.72, $0.92 and $1.15 for 2024-2026, respectively.
Risk warning: New product development may fall short of expectations, product price reduction risk.