Revenue growth is steady, and the expansion of new customers contributes to increased performance
With 2024Q1, the company achieved revenue of 2,671 billion yuan, a year-on-year decrease of 1.95%; realized net profit of 231 million yuan, a year-on-year decrease of 33.80%; and non-IFRS adjusted net profit to mother of 339 million yuan, a year-on-year decrease of 22.70%.
The profit side is under short-term pressure, mainly due to a combination of the phased decline in revenue in 2024Q1 and the year-on-year increase in operating costs and period expenses. In 2023, revenue from the top 20 global pharmaceutical companies and other original customers was 1,723/9.815 billion yuan respectively; more than 800 new customers were added, contributing about 859 million yuan in revenue, and new customer expansion continued to contribute to performance growth. We are optimistic about the long-term development of the company and maintain the original profit forecast. We expect the company's net profit to be 17.89/20.19/2,425 billion yuan, EPS is 1.00/1.13/1.36 yuan, and the current stock price corresponds to 19.1/17.0/14.1 times. In view of the continued increase in the synergy between the company's various business segments, we maintain a “buy” rating.
The core business developed steadily, and new production capacity investment+new business expansion opened up room for growth in 2024Q1. Laboratory services and CMC businesses achieved revenue of 16.05/582 million yuan respectively, a year-on-year decline of 2.92%/2.70%. Laboratory services are the company's core business. In 2023, it participated in 764 drug discovery projects, an increase of about 17% over the same period in 2022. Ningbo Third Park is expected to be gradually put into use in 2024, continuously enhancing the company's service capabilities in animal testing such as safety assessment, pharmacology, and toxicology. By the end of 2023, CMC had 885 projects, and about 85% of its revenue came from drug discovery service customers. Front-end and back-end diversion effects were evident, and the production capacity layout of China, the US and the UK can provide customers with flexible and efficient integrated solutions.
Clinical research services have entered a stage of high-quality development. The macromolecule and CGT business has served several projects in 2023, and clinical research services achieved revenue of 392 million yuan, an increase of 4.60% over the previous year. By the end of 2023, the company had 1,035 clinical CRO projects and 1,450 SMO projects, and clinical research services have entered a stage of high-quality development. In 2023, the two new businesses, Macromolecule and CGT, achieved total revenue of 91.43 million yuan, a year-on-year decrease of 4.15%. By the end of 2023, analytical testing services had been provided for 26 CGT projects and CDMO services for 13 gene therapy projects.
Risk warning: Order delivery falls short of expectations; loss of core technical personnel; environmental and safety production risks.