\u3000\u3 Guocheng Mining Co.Ltd(000688) 315 Novogene Co.Ltd(688315) )
Novogene Co.Ltd(688315) released the first quarterly report of 2022. In the first quarter, the operating revenue was 387 million yuan, a year-on-year increase of 5.83%; The net profit attributable to the parent company was 18.87 million yuan, a year-on-year decrease of 42.7%; The net profit attributable to the parent company after non deduction was 12.38 million yuan, a year-on-year increase of 2.3%.
Viewpoint: the gross profit margin has increased steadily, the performance is under pressure under the disturbance of epidemic situations at home and abroad, and the domestic scientific research level gene sequencing leader has been honed and cultivated deeply, steadily and far.
Under the impact of the epidemic, revenue growth is under pressure, gross profit margin continues to improve, and the amount of added deduction of value-added tax decreases, affecting profit performance. 1) Revenue side: the slowdown is mainly due to the strict control of the epidemic in China and the great challenges of new customers under the sales line; 2) Gross profit margin: in 2022q1, the gross profit margin was 42.17%, about 2pct higher than 40.16% in the same period of last year, and the profitability of scale effect + automation + Intelligence continued to be enabled; 3) The sales expense ratio was 19.37 (18.84% in the same period last year), which was basically the same; The increase in the management fee rate of 11.38% (8.28% in the same period of last year) is mainly related to the increase in employee compensation, share based payment and audit fees; 4) Profit side: the year-on-year decrease in the added deduction amount of value-added tax resulted in the year-on-year decrease of “other income” by 88.63%, affecting the net profit side attributable to the parent company.
We believe that the impact of the epidemic on the company’s business is mainly reflected in: 1) client: the pace of sample preparation in major scientific research institutes and laboratories has slowed down, and the performance release is limited due to insufficient capacity utilization; 2) Sales side: new customer development faces great challenges, but the influence abroad is less than that in China. China’s epidemic control is strict, and it is difficult for the company’s salesperson to attend offline meetings, visit and develop new customers. With the announcement of “abandoning epidemic prevention restrictions and coexisting with the virus” by many overseas countries, the company’s overseas offline marketing activities have gradually resumed, and it is expected that the overseas business is expected to resume normal growth.
Re combing the company’s investment logic: 1) competitive advantage: scale effect + know how precipitation + automation and intelligence help reduce costs and increase efficiency, and build a high competitive moat. The company occupies about 30% of the market share of scientific research gene sequencing in China and about 5% of the global market share, and is the leader of scientific research gene sequencing; 2) Growth space: (1) China: increased market share of scientific research ngs sequencing + rich categories in scientific research fields (protein / metabolite spectrum detection) + expansion of clinical applications (tumor detection / Health Management); (2) Overseas: the increase in outsourcing rate has led to the increase in the market share of scientific research ngs sequencing, with broad overseas growth space.
Profit forecast and investment suggestions: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 267 million yuan, 386 million yuan and 530 million yuan, with a year-on-year increase of 18.6%, 44.7% and 37.5% respectively, and the corresponding PE will be 30x, 21x and 15x respectively. Excluding the impact of amortization of equity incentive expenses, it is expected to realize net profits of 302 million yuan, 402 million yuan and 532 million yuan respectively from 2022 to 2024, with a year-on-year increase of 34%, 33% and 33% respectively. Maintain the “buy” rating.
Risk warning: the impact of the epidemic on business development at home and abroad is less than expected; Risks of lifting the ban on restricted shares, etc
