Novo Zhiyuan announced results for the first quarter of 2023 and 2024. The company achieved revenue of 2.02 billion yuan (+3.97%); net profit to mother of 178 million yuan (+0.47%); net profit after deducting non-return to mother of 140 million yuan (-8.92%). 24Q1 revenue of 468 million yuan (+6.32%); net profit attributable to mother of 0.27 million yuan (+21.40%), net profit not attributable to mother of 0.21 million yuan (+6.85%).
Revenue growth has slowed since 23Q2 due to platform upgrades, and is currently on the recovery track. According to the company's WeChat account, the company began the platform upgrade process in April 23. The transition period may affect the development of some regular businesses, leading to a slowdown in revenue growth. According to financial reports and wind data, the year-on-year revenue growth rate for the 23Q1-24Q1 quarter was +13.96%/+5.66%/-3.10%/+2.18%/+6.32%, respectively, and the growth rate in the single quarter is gradually recovering.
Judging from the 23-year revenue of various business segments, basic life science research services were 636 million yuan (-0.94%), medical research and technical services 269 million yuan (+6.60%), and sequencing platform services were 953 million yuan (+14.05%). The business structure also changed in the short term due to platform changes.
Overseas expansion continued, and short-term profitability declined slightly. According to financial reports, the company has continued to expand its overseas market layout in the past two years, opening new laboratories in Germany and Japan in December 23 and January 24, respectively, further strengthening global localization. Due to the accelerated expansion of overseas markets, the company's sales expenses increased 14.31% year on year to 379 million yuan, accounting for 18.93% of revenue, up about 1.7 pp year on year. This also led to a decline in profitability. The company's net interest rate to mother and 0.99 pp decreased by 0.31 pp and 0.99 pp to 8.89% and 6.99%, respectively.
Profit forecasting and investment advice. With the gradual completion of the platform switch, the company's performance is gradually returning to normal growth, and profit margins are expected to increase as the scale effect shows. The company's net profit for 24-26 is estimated to be 208/2.47/298 million yuan, respectively. The company is valued at PE 35X in 2024, with a corresponding reasonable value of 17.48 yuan/share, maintaining a “buy” rating.
Risk warning. The risk of falling product prices, the risk of overseas operations, and the risk of changes in regulatory policies.