Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 463 million yuan (yoy -24.06%), realized net profit of 35 million yuan (yoy -60.34%), net profit of non-return to mother of 32 million yuan (yoy -57.90%), and cash flow from operating activities of 135 million yuan (yoy -18.88%). The first quarter of 2024 achieved operating income of 98 million yuan (yoy +32.30%), net profit attributable to mother of 08 million yuan (yoy +192.97%), and net profit of non-return to mother of 0.4 billion yuan (yoy +142.15%).
Comment:
Revenue growth is under pressure in the short term due to inventory digestion and increased competition. Affected by industry factors such as inventory digestion and increased competition due to overcapacity from downstream dealers and customers, compounded by the high base in the same period in 2022, the company's revenue growth in 2023 was pressured, achieving revenue of 463 million yuan (yoy -24%), of which: ① liquid treatment products achieved revenue of 274 million yuan (yoy -34%), which we believe was mainly due to a decline in demand for products highly related to the epidemic; ② biological culture products achieved revenue of 157 million yuan (yoy -3%), including cell culture bottles, cell culture transfer bottles, and filtration Core products such as networks have maintained a growing trend; ③ Instruments, equipment and other products achieved revenue of 0.18 million yuan (yoy -40%). Looking at the subregion, the company's domestic sales revenue in 2023 is 165 million yuan (yoy -33%) and export sales revenue is 284 million yuan (yoy -20%). We believe that the impact of industry adjustments is phased. As the company increases its domestic and foreign market expansion efforts, continuously optimizes sales strategies, and while expanding OEM customers, it is expected that revenue will gradually resume growth.
Continue to invest in R&D, consolidate core technical capabilities, reduce costs and increase efficiency to improve profit levels. The company actively lays out new products around market demand in the fields of cell therapy, biomedicine, infectious disease detection and protection, and vaccine research and development. In 2023, the company invested 28.51 million yuan in R&D. With continuous R&D investment, new products such as petri dishes and liquid storage bags (500mL/20L/50L) for assisted reproduction have been put into production. Product strength continues to increase, consolidating the company's competitive advantage in the life science consumables industry. In addition, the company introduced high-end automation equipment to intelligently upgrade production lines, improve production efficiency and quality, and reduce labor costs. The company's net sales margin in 2023 was 7.58%, down 7pp from 2022, mainly due to a decline in revenue scale and an increase in fixed costs such as depreciation and interest. We believe that as the company continues to optimize operations, strengthen cost control, and adjust the business structure, profitability is expected to gradually recover.
Profit forecast: We expect the company's revenue for 2024-2026 to be 558, 6.74, and 815 million yuan, respectively, with year-on-year growth rates of 20.5%, 20.7%, and 21.0%, respectively, and realized net profit of 0.60, 0.78, and 100 million yuan, with year-on-year increases of 72.8%, 29.2%, and 29.2%, respectively, corresponding to the current stock price PE of 30, 23, and 18 times, respectively.
Risk factors: risk of product development and registration failure; increased risk of market competition; risk of developing independent brands falling short of expectations.