every AI newsletter, on December 28, 2023, zheshang securities issued a research report review of norweizan (688105).

Investment Points

Financial performance: revenue increased slightly month-on-month, single-quarter profit turned positive

2023Q1-Q3: Realized operating income of 0.869 billion yuan, down 62.29 percent year-on-year, realized net profit of -76.39 million yuan, down 110.19 percent year-on-year, and realized net profit of -0.139 billion yuan, down 119.95 percent year-on-year.

23Q3: realized operating income of 0.298 billion yuan, down 56.48 percent year-on-year; realized net profit of 4.7 million yuan, down 96.54 percent year-on-year, and realized net profit of -21.01 million yuan, down 117.24 percent year-on-year.

Growth capacity: revenue is basically flat month-on-month, new products or new additions

the company's Q3 single-quarter results year-on-year, we speculate that it is mainly affected by the base caused by the large order self-inspection products in the same period in 2022, and the month-on-month revenue is basically flat, mainly affected by downstream scientific research and enterprise customer demand. We believe that the company's three major sectors of business life sciences with the gradual recovery of scientific research needs, new product chemical magnetic bead purification kit, methylation single-chain library kit, double-chain library kit, etc. gradually release, is expected to gradually restore high growth in 24-25 years. IVD Plate Company cooperated with Mindray Medical in 2023H1 on the overall automation solution for respiratory pathogen detection and infection screening, and has already carried out relevant verification work. We expect to start gradually increasing the volume in 2024. The Alzheimer's disease series products of chemiluminescence platform have made major breakthroughs in raw material research, and the products have completed feasibility verification.

Profitability: gross margin fluctuates slightly, expense-side optimization is obvious

2023Q3 gross margin of 68.33 percent, down 1.45pct year-on-year, down 8.02pct month-on-month, gross margin fluctuations we expect to be mainly related to the life sciences business terminal price competition, product structure changes and biopharmaceutical revenue scale reduction and other factors. During the period, the cost rate improved significantly month-on-month, with a sales expense rate of 34.34 percent, down 11.75pct month-on-month, a management expense rate of 19.09 percent, an increase of 0.58pct month-on-month, and a research and development expense rate of 24.97 percent, down 7.38pct month-on-month. Personnel optimization and resource focus are beginning to bear fruit. We expect the company's absolute value of corporate expenses to increase slightly in 2024-2025, and profitability is expected to increase further as revenue volume increases.

Innovation is always the main theme of the company's development

as of December 18, 2023, the company applied for 91 new intellectual property rights in 2023, including 54 invention patents, 56 authorized, including 24 invention patents. The company has always been firm in research and development innovation, to build the hard strength of science and technology, with innovation through the cycle, improve the ceiling.

Earnings Forecast & Valuation

Taking into account the target of the company's equity incentive and the gradual release of new products, we forecast the company's net profit attributable to the parent company in 2023-2025 to be -31.73 million, 0.176 billion and 0.371 billion, respectively, and EPS to be -0.08, 0.44 and 0.93 yuan, respectively. Corresponding to the closing price of December 28, 2023, the 2024 PE is about 73 times. Maintain an "overweight" rating with reference to comparable company valuations.

Risk Alert

Order delivery cyclicality & volatility risk, M & A integration progress less than expected, goodwill impairment risk, price reduction risk due to intense market competition.

(Source: Huibo Investment Research)

Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Please verify before use. Operate accordingly at your own risk.

(edited by Zeng Jianhui)