Incidents:
The company released its 2023 annual report. In 2023, the company achieved operating income of 403 million yuan, an increase of 6.55% over the previous year, and realized net profit of 86 million yuan, a year-on-year decrease of 7.48%. Looking at Q4 alone, the company achieved revenue of 120 million yuan in Q4 of 2023, an increase of 6.79% over the previous year, and achieved net profit of 31 million yuan to mother, an increase of 16.23% over the previous year. The company as a whole met market expectations.
Key points of investment:
All sectors have maintained steady growth, and profitability has gradually recovered. According to the company's 23 annual report, in 2023, the company's high-end chemical reagents achieved revenue of 210 million yuan, a year-on-year increase of 15%; life science reagents achieved revenue of 96 million yuan, a year-on-year decrease of 11%, mainly due to the impact of the high base in '22; analytical chromatography reagents achieved revenue of 52 million yuan, up 6% year on year; material science reagents achieved revenue of 32 million yuan, up 29% year on year; and revenue of laboratory consumables reached 8.27 million yuan, up 15% year on year.
The company's Q4 gross profit margin and net profit margin both achieved significant year-on-year and month-on-month increases, indicating that the company's cost reduction and fee control is gradually showing results.
It is proposed to acquire Shanghai Yuanye Biotech to continue to empower its main business. On March 18, 2024, the company announced that it plans to acquire 51.00% of Shanghai Yuanye Biotechnology's shares for about 181 million yuan. The aim is to achieve complementary product line and customer resource advantages, share resources in product development, R&D, quality control, production, warehousing and online sales, expand the business scale, promote the development of the main business, and enhance the company's overall competitiveness. 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 research customers in the fields of pharmaceuticals, food hygiene, electronics, petrochemicals, bioengineering and other industries. Aladdin's reagent products account for a relatively high proportion of high-end chemical reagents, and there is a certain difference with Yuanye Biotech's product line. Through this merger and acquisition, the company's biochemical reagent product line can be enriched, the company's shortcomings in this area can be filled, and a good synergy relationship with Yuanye Biotech has formed. Yuanye Biotech promises to deduct no less than 33 million/40 million/47 million yuan in 24-26 years. If it is gradually realized, it will continue to enhance the company's future performance.
Profit forecasting and investment ratings. As one of the leading domestic pharmaceutical upstream companies, profit margins are recovering quarterly. Considering that industry demand has not fully recovered, we lowered our 24-year net profit forecast to be 123 million yuan (original value of 189 million yuan), and the net profit forecast for the new company for 25-26 years was 1.49 million yuan and 181 million yuan, corresponding PE was 24, 20, and 16 times respectively. We selected upstream pharmaceutical companies Nanowei Technology, Bide Pharmaceutical, and Haoyuan Pharmaceutical as comparable companies, corresponding to the 24-year industry average PE, which is 31 times higher than Aladdin's 24-year equivalent valuation. That's why we maintain our “Overweight” rating.
Risk warning: New product development falls short of expectations, industry competition deteriorates, product price decline risk, domestic substitution process falls short of expectations.