Overseas market revenue increased 40% year over year, and gross margin improved month-on-month. In 2023, the company achieved revenue of 622 million yuan (+20.5% YoY), net profit of 159 million yuan (YoY -3.5%), and net profit of 10.7 million yuan (YoY +5.0%). It is estimated that the company is still in the business expansion period, continuing to invest heavily in R&D, increasing overseas market development efforts, expanding production personnel, and increasing depreciation and amortization after new production capacity is put into production. With 2024Q1, the company achieved revenue of 157 million yuan (+12.0% YoY), net profit of 29.48 million yuan (YoY -5.1%), net profit without return to mother of 22.87 million yuan (+2.7% YoY), and gross profit margin of 66.0% (up 2.5pp from 2023Q4). It is expected that gross margin will continue to improve as production capacity of new facilities declines.
By business sector, the company's commercialized mouse model sales achieved revenue of 367 million yuan (YoY +13.6%), accounting for 59% of main business revenue, with a gross profit margin of 71.6% (YoY -4.8pp). It is estimated mainly due to the increase in the share of low gross margin categories in the product structure and additional depreciation after the launch of new production capacity; functional pharmacodynamics services achieved revenue of 132 million yuan (+36.1% YoY), mainly due to the further improvement of the company's mouse product line bank and increased customer demand; customized breeding business achieved revenue of 0.79 million yuan (YoY +22.4%) Gross profit margin 60.2% (+4.3pp year over year); model customization business achieved revenue of 35 million yuan (+49.4% year over year), gross profit margin of 59.5% (+2.7pp year over year).
By region, the domestic market achieved revenue of 529 million yuan (+17.7% YoY), and served more than 2,300 domestic customers in 2023. The focus was on strengthening hospital customer development, currently covering nearly 600 of the top three hospitals, with a coverage rate of ~ 35%; the overseas market achieved revenue of 92.95 million yuan (+40.0% YoY), which increased its share of revenue to ~ 15%, serving more than 200 overseas customers. Among them, overseas industrial customer revenue accounted for more than 70% of total overseas revenue and achieved sales in more than 20 countries.
New production capacity at home and abroad has been put into operation one after another. In terms of domestic production capacity, the company's projects such as Beijing Daxing, Shanghai Baoshan, and Guangdong Phase II were completed and put into operation in 2023, adding about 80,000 cages. Currently, various facilities have been introduced, and product expansion work is progressing in an orderly manner; businesses such as proxy breeding for new facilities have also been carried out normally, and capacity utilization is rising steadily. In terms of foreign production capacity, the company's first overseas facility landed in San Diego and opened in 2024Q1. With the US facility put into operation, the company's response speed and service capabilities to overseas customers will further improve, and overseas market expansion is expected to accelerate.
Investment advice: According to the company's 2023 annual report and 2024 quarterly report, we have adjusted the profit forecast. The net profit for 2024-2025 is estimated to be RMB2.04/259 million (previous value was RMB2.4/340 million yuan), with an additional forecast value of RMB297 million for 2026. Currently, the PE corresponding to the stock price is 25/20/17x, maintaining an “incremental” rating.
Risk warning: the risk of developing new models falling short of expectations, the risk of increased market competition, etc.